Mom’s Money Makeover: How to Improve Your Credit Score

Being a mom is a juggling act. Sometimes when life gets busy you can lose track of your finances. Maybe you miss a payment one month. No big deal? Well, it is if it happens more than once and you are trying to apply for a loan. Your credit rating will slide if you aren’t on top of things. Here’s how to whip it back into shape if it has gone for a dive.

Never miss a payment

In many instances, a poor credit rating can be a result of a disorganized lifestyle. You may have the money to pay your bills, but you are missing your regular payment due dates. In this case, automatic payments will go a long way to getting you back where you should be. Schedule your payments to happen throughout the month, coinciding with your pay cheques, so that your bank account isn’t emptied all at once. For example, rent comes out on the first of the month, cable at the end of the first week, Internet on the second and cell phone bill on the third.  If you show that you can pay on time, your credit rating will begin to climb again.

Pay more than the minimum

Ideally, you will pay your credit card off every month. If this isn’t possible, try to keep your running debt load under 30% of your allowable amount. This will protect you from higher interest rates and monthly fees. When you put some money toward your credit card balance each month, make every effort to pay more than the minimum amount due. You also need to look at other areas of your life where credit is involved. If you can reduce your debt load by eliminating a car payment, this will immediately improve your debt ratio and credit score. You can also ask your lender to increase your credit rating for this purpose. If you have been making regular payments, there is no reason why they shouldn’t raise your limit, especially if it is going to help your credit score.

Don’t allow numerous inquiries

If you are shopping around for a mortgage or a new car, or checking your own credit score, it doesn’t have much of an effect on your credit rating. These are called “single probe” inquiries. But if you are applying for every store credit card that is offered to you, those “hard inquiries” add up. Half a dozen credit rating inquiries in one year can be detrimental to your credit worthiness.

Credit ratings are a snapshot of your life at the moment the inquiry is made. If you just bought a car, paid a kid’s university tuition and took a trip somewhere, you might be hurting credit-wise. Try to spread out your bigger expenditures over the year so that they don’t all happen at once, leaving you in a tough spot with high payments to make. By following these steps and monitoring your own finances carefully throughout the year, you should score higher within a year.