A low income doesn’t affect your credit score—but it can make it harder to pay your bills, which could lead to late payments or ballooning debt that can hurt your credit. If you live on a low income, you can improve your credit by adding a tradeline; like the ones offered by Credit Services of America, to improve your credit score. Trade lines offered by Credit Services of America, give an average boost of 10-60 points, and up to 180 points! A low income doesn’t have to be a barrier to building good credit that can help you achieve your financial goals. Here are 8 ways you can improve credit even if cash is tight.
1. Check Your Credit Report
Checking your credit report is a key first step to improving your credit. Right now, we are offering a free credit consultation! We can look at your report from each of the three major credit bureaus (TransUnion, Experian, or Equifax) and verify information reported is accurate. If an account is missing, or you spot inaccurate information, we can assist you in getting it corrected.
2. Get a Trade Line
A trade line is an account that we add to your credit report that has been open for longer than 1 year, has perfect payment history, and less than 10% utilization rate. You can see how adding one of our tradelines to your credit report can really benefit your credit score! Credit Services of America is the only place to offer 4 services under one roof (credit repair, Trade Lines, Debt Settlement, Student Loan Consolidation). Whatever your situation is , you can count on our team of professionals to develop a plan to help reach your goals.
3. Open a Secured Credit Card
A secured credit card is often easier to qualify for than an unsecured card. To get a secured credit card, you make a refundable security deposit that acts as collateral for the account, and the deposit amount typically determines the card’s spending limit. After a certain number of on-time payments, your card issuer may convert the secured card to an unsecured card and refund your deposit. We can help you qualify for a secured card through one of our many partners and is a great way to start building positive credit history!
4. Pay Bills on Time
Payment history is the biggest factor in your credit score; missing even one payment can negatively affect your score. Late payments aren’t reported to the credit bureaus until they are 30 days late, but you may incur fees from your lender or credit card company before then. To stay on time, you can set up automatic payments from your bank account. Do this only if you’re confident you’ll have enough money in your account to cover the payment—otherwise, you might overdraw your account and face bank fees. If your income fluctuates, set a reminder a week before payment is due instead and manually pay the bill.
5. Keep Old Credit Card Accounts Open
If credit cards have tempted you to splurge in the past, closing paid-off accounts might seem like a smart way to avoid overspending. But closing an old credit account can wind up hurting your credit by reducing your available credit, increasing your credit utilization and shortening your credit history. Instead of closing an old account, put the credit card in a safe place where you aren’t tempted to use it. Even better, use the card for a regular recurring monthly payment and pay it off in full each month; otherwise, the card issuer could close the account or reduce your credit limit due to inactivity.
6. Apply for New Credit Sparingly
Whenever you apply for new credit, the lender checks your credit report. This is known as a hard inquiry and remains on your credit report for two years. Hard inquiries can have a slight negative impact on your credit score that usually disappears after a few months. The negative impact is strongest if you have multiple hard inquiries for different kinds of credit within a short time period. (Checking your own credit report results in a soft inquiry, which doesn’t affect your credit score.)
7. Pay Down Debt
Carrying balances on credit cards accumulates interest that can quickly add up. Aim to pay credit card bills in full each month to avoid interest. If you can’t pay the balance in full, avoid using the cards, then work to pay off the balances. Using more than 10% of a card’s available credit can hurt your credit score. Bring each card’s balance below 10% of its credit limit, then focus on paying them all off.
8. Get Help
It’s tough to manage money when you’re barely making ends meet. If you’re feeling overwhelmed, call us for your free credit consultation. We can help you with all of your credit and debt needs. It takes time to improve your credit, and can be challenging on a low income. But good credit opens a world of opportunities, making it easier to qualify for a car loan, rent an apartment or even get a job. Focusing on the benefits of a better credit score will help you stay motivated for the long haul. Check your credit score and credit report periodically to keep tabs on your progress—and give yourself credit for all your hard work.