1). Knowing where your score stands... Only way to know is to check your credit score. Each credit bureau has its own report and you should check all three; Equifax, Transunion, and Experian. Depending on your state, you are entitled to one free credit report for the year. You can retrieve it by visiting www.annualcreditreport.com . Once you receive it, analyze if there are any fallacies, dispute it and make sure your current address, employer and phone # are all up to date.2). Have credit references.... Only way to build a HEALTHY score is to have people report how you are with paying back your bills i.e. credit cards, loans, or debts on time. A credit card is a great start or a small loan from a credit union. Banks will usually turn you down because no credit is as worse than bad credit.
3). Be stingy with the social security number.... After all this is the most important number than you health insurance ID #. It traces everything back to you and identity theft is no walk in the park, so be careful who you give it to. Also, running your credit too much can affect your score, it sends off a signal of desperateness. Also, if you already have credit, why keep trying to get more? The healthiest balance of credit is one that has a mixed amount of credit.
4). Don't abuse the opportunities.... Just because someone gave you a credit card or car loan doesn't mean you should abuse it. It means it's proving grounds and it's time to show your lender that since they gave it to you, that you can handle it and more. Always stay under 35% of your credit limit of your credit card. Example: If your credit card limit is $300, your carrying balance if you're not at Zero should always stay under $105. Never a penny more.... That's if you're carrying a large balance, sometimes if you have a problem with over spending, it is best to pay a bill that's under $100 each month and pay it off each month....
5). Pay your bills on time each month.... In the financial world there is no excuse for being late, even though we know life happens. No matter the cause or reason if you miss a payment it's going to adversely affect your score and can't be easily fixed. It also makes lenders weary of if they want to lend to you again or any new lenders that want to lend to you in the future.
6). Most important part of a recipe is having multiple things to put in it.... The healthiest credit report and score is one blended with the different types of loans- Credit Card, Loan, Mortgage, Auto Loan and sometimes Student Loans. All in which are paid on time or deferred and never late. Length of time you had an account is extremely important as well, so wait 6-12 months before applying for anything new and remember be careful because too much credit applying will hurt your score. This is how your credit scores are made and balanced: 35% (payment history), 30% (amounts owed), 15% (types of credit in use), 10% (new credit), and 10% (types of credit in use). To have any more or less will cause the score to fluctuate or consisitently change. As you can see (35% ) History is everything. The longer you have an account, the more history you gain. The more you show your worthiness which is why a person that has bad credit but a longer history is likely to get approved quicker than a person with no credit (10% Credit in use). Inquiries are bad, never do it unless it is a mandatory thing and always do it on the same day. Never pull your credit more than six times in two years if possible. If you do it- it can contribute to a score reduction of 50-100 points.
7). The best and final ingredient is responsibility.... As long as you are responsible with the credit that is given to you, than others will report positively to your credit report and other lenders are less discreet about giving you credit. Pay you bills on time, remember, utility companies can now report to the credit bureau for late payments. The best way to be responsible is to monitor your score. Companies like www.scoresense.com will help you with your credit score. If any changes happen, then you are notified immediately.
Do you have credit questions you want me to answer? Email me at rjwhite@rjcreditassociates.biz i keep all questions anonymous, but I'll answer them in my next blog.
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