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Improve Your Credit Score

Better Credit Envy

December 16, 2015 by penn

Your friends seem to be able to afford whatever they wish. You, with a budget that allows only a very limited amount of fun, just can’t figure out how they do it. The fact is, there are a few things they may do that allow them a better credit score:

  • Payments on time, and more than the minimum
  • No new cards
  • Rotating cards
  • Keeping purchases within budget
  • Monitoring credit scores, and
  • Paying back bills

Better Credit

[Read: When Life Goals May Mean a Lower Credit Score]

Nothing that you don’t think you’re doing, right? But take a closer look, and make sure you are actually not making problems for yourself. The best way to a better credit score is self-honesty, and looking at the finances, when you are not under exceptional stress, is a good place to restart.

Payment habits

These are the two areas where credit can get out of control so easily. Making only the minimum payment does avoid problems, but it also keeps the debt alive as long as possible. If you make the minimum payment, plus even a few dollars more, you will reduce the fees, and the length of time that you have that debt. Start with the largest interest charge first. If you can, add extra money to another charge that is close to being paid off.

Not using your cards to the maximum means not only smaller payments, but you have a cushion of credit if there is a sudden need for car or home repair. Making charges that you are positive that you can pay off, in full, every month is a sound way to better credit.

Credit scores are calculated on the amount of credit you have available. A card with a high limit will affect your score negatively if the account is closed because it isn’t used for a long time. Keeping cards, that you are sure you can pay off, in rotation will help keep your better credit rating.  You are showing that you can handle having large amounts of credit, without overdoing it.

New credit

Patience is a needed thing, when trying to build or rebuild a credit score.  Paying off debts, especially those that have gone to a debt collector, will help rebuild credit. Adding the payment amount to another debt will quickly bring you to a point where you have many fewer debts. This will allow you to start a better credit habit. If you save the funds you have been spending on back debts, you will have a savings account that you can build on. You have not  had that money available, so there is nothing you need give up to save.

Applying for new cards is not a good idea, unless there is a solid financial reason to do so. The old card stays open on your credit report, increasing the amount of credit you have available on paper. The new card looks at your credit report, and sees how much credit you have available, and what you have done with it. If you apply for new cards, because all of your other ones are at their limits, you will do double damage to your score, with both the higher payments possible, as well as inquiries into your credit worthiness on record.

How long has it been since you looked at your credit score?  There are several places to get a copy of your score, as well as an annual free credit score report. Some cards now offer a monthly look at your credit score, making it easy to spot any financial activity that is questionable, and get it taken care of. This can be a long process, so catching any errors quickly will save you effort in the long term, as well as insuring better credit for you now.

Purchase sense

Even if you don’t see it, your friends may have been quietly saving for months to afford a larger down payment on a car, or for the vacation that you envy. Being able to plan in advance is one thing a budget should allow you to do, and your friends may have given up something that you can’t see to be able to afford these luxuries. Better credit planning  will  insure that the payments these items cause are not barely affordable, but can be easily fit into the budget with either the larger down payment, or the savings for specific items.

[Read: 12 Surprising Ways You’re Sabotaging Your Credit Score]

One other thing

Your friends may not have the best of credit! They may be living without a budget, closing their eyes to the consequences of not saving, and building a pile of debt that will take years of hard work to pay down. Your impression of their credit scores may be influenced by things that actually will hurt them in the long run. Better credit isn’t a contest, but something you do for yourself, and your future.

Filed Under: personal finance Tagged With: Better Credit, Improve Your Credit Score

Ways to Fix Your Credit Score

April 11, 2014 by penn

Your credit score determines how different banks and other financial institutions view your credit worthiness. For example, it can determine whether you are able to get a mortgage or a car loan. If you have a low credit score you won’t be able to get the best rates on your mortgage if you are approved. It can also affect insurance rates. In other words, it can save or cost you hundreds or even thousands of dollars. If your credit score is not where you would like, the good news is that you can take steps to fix your credit score.It just takes some time and effort on your part and some research. The payoff in more and better credit offers is certainly worth it though.

Fix Your Credit Score

Get Your Credit Score

Because it can affect your finances in so many different areas, it’s really important to keep up with your credit score. If you haven’t done so recently, it’s a good idea to go online and get your credit report and your credit score. Getting your score is the first thing you should do if you think you might need to fix your credit score.If it turns out that your credit score could use a boost, try some of the tips below to fix your credit score.

  • Check Credit Report for Any Inaccuracies.  Believe it or not, it is pretty common for your credit report to have some inaccuracies in it. This could be an old debt is still showing up even though you actually paid it off years ago. It could also be a debt that isn’t even yours. These errors need to be removed to fix your credit score.In order to remove the errors; you just need to file challenges on them. Many companies offer to remove these errors from your report. Do your research and you will find that anything these companies offer to do, you are able to do yourself. It probably will take a little more time if you do the work yourself but it is cheaper than hiring someone else to do it.
  • Check On A Credit Limit Increase. This is one of the best ways to fix your credit score because the amount of credit available to you is one of the biggest factors affecting your credit score. If you are already using most or all of your credit, see if your credit card company will increase the limit. If you have a good credit record with them, you have a good chance of getting an increase. With more credit available to you, your score should go up.
  • Try To Pay Off Debt Faster. Again, one of the main factors in determining your credit score is the amount of credit you have available to you. The amount of credit you are using each month is referred to as credit utilization. If you pay more than just the minimum each month, this will free up more of your credit, keep your utilization low and help fix your credit score.
  • Transfer Your Credit Card Balances. There are a couple of benefits to doing this. For one, you free up the credit on the existing cards. This is great for your credit utilization. Also, a lot of credit cards offer great introductory rates for balance transfers. This gives you a better rate to pay the balances off, at least during the introductory period. Just remember that it is an introductory rate and will increase after a specified number of months. To maximize the benefit of transferring your balances, you really need to pay them off during the introductory period, or at least pay them down quite a bit. If you follow this advice, it will definitely help you fix your credit score.
  • Ask For Forgiveness. If you have been late on a credit card payment, this will definitely affect your credit score negatively. In fact, payment history is one of the main factors in determining your score. More specifically, they look at whether or not your payments are on time as agreed. So, if you have had a late payment, you should try to have it excused. This is not always successful but it is worth a try. If you were only late on your payment one time and you otherwise have a good track record with them, you have a much better chance of having the late payment forgiven. If successful, this is a great way to fix your credit score.

In conclusion, your credit score is one of the biggest factors in determining the types of credit you are offered. Over the long run, having a low score could really cost you a lot of money. Take some time, do your research and try the tips listed above. They can really help you fix your credit score.

Filed Under: personal finance Tagged With: boost credit score, credit score, Fix Your Credit Score, How to Fix Your Credit Score, Improve Your Credit Score, Ways to Fix Your Credit Score

Improve Your Credit Score and Make It an Asset

October 3, 2013 by penn

Improve Your Credit Score

Most people know that they have a credit score, but in the press of daily living, learning how a credit score is calculated, and what you can do to improve your credit score, are among the many things that can be put off until next week…and usually are. Considering the impact that your credit score can have on your daily cost of living, that is more than just a little short sighted.

How Does My FICO Credit Score Make A Difference In My Day To Day Financial Life?

In the US there are three major credit rating agencies, of which FICO is the largest. FICO and the other two major US credit rating agencies can best be described as for-profit enterprises that collect information about your money management history that is of potential value to lending institutions. They consolidate that information into a credit report, which becomes the basis for your credit score. When you apply for any kind of credit, lenders routinely purchase that collected information as a measure of your credit worthiness. Does it pay to try to improve your credit score? Here are a few of the important things your credit score determines:

  • The interest rate you are offered for home a mortgage or a home equity line of credit;
  • The credit card interest rates you qualify for;
  • The credit limit card issuers make available to you;
  • The upfront cash required in order to initiate a car lease agreement;
  • The interest rate and terms available to you for auto loans, debt consolidation loans, and other installment loans.

What Is In Your Credit Report?

In terms of their relative importance to your effort to improve your credit score, the information that makes up your credit report includes:

  • Your history of making monthly loan payments in full and on time;
  • The total amount you owe, especially as a percentage of the credit that is available to you;
  • The types of loans that you have qualified for in the past, and your success in repaying those loans. Types of loans considered include home mortgages, installment loans for automobiles or appliances, credit cards, debt consolidation loans, and others.
  • Your recent history of credit applications.

How Can You Improve Your Credit Score?

If your credit report contains many negative entries, it may take months or years to improve your credit score. The good news is that “recent credit report inputs” are weighted higher than “old credit report inputs”, so it does pay to get started. Here are nine basic steps you can take to improve your credit score:

  1. Get a free copy of your FICO credit report. You are entitled to one free copy of your credit report per year from FICO and each of the other major credit reporting companies. Take the time to carefully check the report for errors. Errors that negatively affect your credit score do occur, and it is your responsibility to find them and report them to the credit rating agency. Finding and correcting erroneous negative credit report inputs is the fastest way to improve your credit score.
  2. Get help from an experienced debt counselor to establish a monthly household budget that includes a regular allocation for debt repayment that exceeds minimum payment requirements.
  3. Build up a “rainy day” savings account to help you through tight budget months and/or to handle unexpected emergencies without missing a “due date” on your existing debt.
  4. Do everything you can to avoid accidental late payments. Setting up automatic direct payments from your checking account for loans that have the same payment every month is a good first step. Some people find it helpful to make all other debt payments on the same date or dates each month.
  5. Establish a “hit list” to focus debt repayment funds on the debts that are most injurious to your credit score.
  6. If recommended by an experienced debt counselor, consider applying for an installment debt consolidation loan to reduce the number of payments you have to make per month, and possibly lower the total repayment amount per month. Be aware, however, that debt consolidation loans often increase the total amount of interest you will pay by the time the loan is paid in full.
  7. Keep a couple of credit card accounts open even if you could afford to close them entirely. Use those card sparingly, and the entire balance in full every month.
  8. Take out one or two small consumer installment loans that you are sure you can pay off easily. MAKE EACH PAYMENT IN FULL AND ON TIME!
  9. Be cautious in authorizing lenders to request credit reports. Bring your own copy of a current credit report to the lender to assure that you will be approved pending his or her verification of the credit information you presented. Avoid applying for credit and being denied.

Filed Under: Credit Card, credit counseling, personal finance Tagged With: Improve Your Credit Score

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