Go for the Gold!

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Olympics

London’s calling, and the Olympian’s are hard at work working on their butterfly strokes and back handsprings to win that coveted gold medal. But for those of us who don’t spend our days and nights in the gym training, sweating it out to finally stand on the podium and wave to millions of adoring fans – victorious – we have to settle for striving toward personal finance glory.

So while we are all rooting for Team USA to bring home the gold, and I am glued to the TV watching my Olympic crush Michael Phelps, as well as keeping my eye out for the newly crowned Princess Kate Middleton for some fashionable Olympic looks, we should all take a moment to realize what the dedication and perseverance of these incredible athletes can teach us about our credit.

 

1. Pay all of your bills on time, every time.
Like missing a practice at the gym will hurt your game, missing a credit card payment will definitely hurt your score. If your credit score is under 700, chances are you’ve missed a payment in the past. Missing monthly payments is one of the worst things you can do to your credit score. That’s because payment history, or how reliably you’ve paid your bills on time in the past, makes up roughly a third of your credit score – more than any other factor. If you work on only one thing to improve your credit, this would be it.

2. Use a small percentage of your available credit.
Slow and steady wins the race, just like our marathon runners you don’t want to waste too much energy too early on. The second largest piece of your credit score is “credit utilization,” or the percentage of credit you use (balances) compared to the amount of credit that’s available (your limits).

3. Dispute inaccuracies on your credit report.
Poor sports are frowned upon at the Olympic games, there are rarely any mistakes when it comes to the winner thanks to high tech cameras, but this is not the case with your credit! Nearly 80 percent of credit reports contain an error according to a survey by the U.S. Public Interest Research Groups, and errors can take a toll on your credit score.

That’s why it’s important to check your credit report regularly and dispute any inaccurate information that you may find. You can get a free copy of your credit report and score, plus the ability to dispute errors online, at Quizzle.com.

4. Avoid applying for numerous new credit lines in a short period of time.
Playing a soccer match back to back is hard work and that’s why there is usually some slack time. For an athlete to be the best they can be they need to give their body rest. Part of your credit score is new credit, which includes the amount of new credit inquiries on your credit report, which register any time you apply for credit.

While there are built-in protections to limit the number of inquiries to your credit report when shopping for a home loan or auto loan, that’s not true of credit cards. Each time you apply for a new credit card, your credit score will take a hit – about three to five points. Avoid chipping away at your credit score by limiting how many credit cards you apply for in a short period of time.

5. Don’t close credit card accounts you don’t use.
Just because the gold medalists win their race, it does not mean they stop! They keep going and keep training! When you close a credit card account, you’re decreasing the amount of credit that’s available to you (credit limits), which impacts your credit utilization.

Remember – credit utilization is how much credit you use compared to how much credit is available to you. If you continue to use roughly the same amount of credit, but have lessened the amount of credit available to you, your credit utilization will go up and your credit score will go down

When it comes to improving your credit score, there are no fast fixes. Real credit improvement takes time, patience and consistent smart use of credit. So stick with it, pay your bills on time and be responsible. With time, your credit score will rise and you’ll begin to enjoy the benefits of good credit.

For more tips and tools to help you manage your home, money and credit – including the most affordable credit monitoring on the web and complete identity theft protection – visit Quizzle.com.