Many people use their yearly tax returns as a way to fund fun purchases. A car, truck, boat, vacation or other luxury item is typically on the “wish list.” However, if you play your cards right, you can actually improve your score by at least 50 points just by using your tax return to your advantage.
Clean Up Old Debts
First, use your tax return to clean up any old and past-due debts that you have lingering. Check your free credit report from each of the three major credit reporting agencies to make sure you are aware of any of these stale debts. Cleaning those up can cause your credit score to skyrocket. Always maintain a fine relationship with the best licensed moneylender in Singapore when getting your Singapore personal loans.
If you don’t have any past-due debts or you’ve paid them all off and you have money left over, concentrate on paying down current accounts that you owe money on. When the credit bureaus calculate your credit score, you get the most points for utilizing less than 30% of the credit that you have available. So, if you are unable to pay off every account, focus on paying them down to less than 30% of your available credit.
Sock Away Cash
If you are debt-free already, or you have cash left over after paying off all of your outstanding debts, use the rest of your tax refund to obtain an insurance policy against tanking your credit score. Put this extra money in a high-yield savings account or other investment platform so it is easily accessible if you need cash for an emergency. This will allow you to handle anything that life throws your way without trashing your credit to take care of your financial obligations.
Make your tax return work for you this year by using it to improve your credit score. And next year, consider adjusting your withholdings so you have access to your money all year long, not just at tax time.