Like many, knowing the ABC's of credit and how it works was something I wasn't privy to growing up. Once I started adulting, it still wasn't something that came in the non-existent adult manual... It was trial and error and a long road of discovery to achieve good credit. The first step in getting your score up is analyzing where you are, debts you have, assessing possible inaccuracies and creating a plan to make it happen. There are a few tactics that assist in making this goal reality and breaking them down is what it's all about!
Checking for errors and old debts...
This is the first step before you dive head first into mastering this Rubik's cube. Items that are past 7 years can be removed with very little effort and can greatly impact your score. Although the debts weigh less than newer discrepancies, they still affect you. The goal is to have nothing negatively reporting. Submit your disputes through Equifax, Experian and Transunion directly and they will correct, remove and repair information in a timely manner. This is much easier and takes the guesswork out of contact each company reporting delinquency.
Choose a card wisely!
Get a secured card that has a 6 month to 1 year graduation offer. Wells Fargo and Capital One both offer great programs for this! These programs allow you to graduate to an unsecured card in under 1 year with on time payment and consistently met minimums. This immediately boosts your score and gets you on track to growing your score. After the monitoring period, they will also usually increase your limit which also ups your score. You're starting to win!
Utilization
Utilization can make or break your score! Strive to keep your cards under 30%. Example: if your limit is $100 keep your usage under $30. Now, here the gotcha that no one talks about... What if your utilization is high but you don't have the finances to reduce your utilization permanently? You STILL can win while you're trying to re-work your budget to pay your cards down. How?? Learn your billing cycle cut off. By learning this date, you can plan to have it temporarily paid down before monthly reports are released to the credit bureaus. Once cycle has been cut, you can keep with the process until you free up additional funds to put towards your card. Making sure you don't do unsual (to your normal habits) spending will keep you from incurring more debt. Paying card down right before the cut off with lower the interest you're having to pay as well.
To the $25!
If you pay bills with your cards, rounding up to the nearest $25 for every line item will have you chopping down your balance in no time. Example: electric bill: $55.26, you are going to pay $75 onto your card. Rounding up = Balance down... it's a win, win!
Finding Treasure
Finding ways to pay down/off cards medical bills, etc. can sometimes be rough. When income hasn't changed, hunt through your existing bills to see where you can free up funds. I call it treasure hunting. It's a great idea to evaluate your bills every 6 months. Doing so can put more money back in your pocket and help you get on track. Rewriting insurance policies or getting a new promotion for existing services can both give you back hundreds...hundreds that can get you out of debt and closer to better credit.
PREVENTION
This is a big one. PREVENTION is the biggest tip I can give. Be open to make payment arrangements. This can avoid anything negatively hitting your credit. Create a repayment plan for something you may owe before the letters start coming. Did you know that medical debts will accept amounts as little as $5 a month to keep you from going to collections? Even if it's thousands?!
If it is simply not feasible to pay on a monthly bases, still set up the payment arrangement then look into grant and donations given by the hospital or business to pay what's owed. This buys you time and many companies have a fund set up just for this and are willing to give the information IF requested (not EVER advertised). With just a little (very minimal) information from you, they many times cover the debt at 100%. Don't have not because you asked not!
Try these tips on your way to amazing credit! You can start at any stage in your credit and they are sure to work for the positive. Great credit can unlock so many options for you and family. It's truly so worth it to accomplish this goal. Questions?! Contact me!