We all make mistakes and recovering from them shouldn’t be too difficult nor should we continue to be penalized for them today but when it comes to our credit, there isn’t a simple quick fix that exists. Or is there?
Understanding your credit can be extremely difficult let along trying to repair any negative information that might be adversely affecting your credit. So, what do you do? Do you take on this laborious task of improving your credit by researching on google the latest strategies to help you improve your credit or should you seek help from the experts at Credit Repair Solutions?
It might be a bit biased for me to say hire us since I am the owner of a credit repair company based in the City of Downey but I would much rather give you the tools so you can take charge of your credit and finally achieve a healthy credit score without having to hire a credit repair company.
Below are simple 3 steps to help you improve your credit:
- Obtain a copy of your credit report
As easy and simple as that sounds, you need a recent copy of your credit report you can review it thoroughly and determine what needs attention such as but not limited to: Collection accounts, wrong names, wrong addresses, inaccurate information etc..
As consumers, we are allowed a free copy of our credit report from each credit agency Transition, Equifax and Experian from www.annualcreditreport.com Now, this site won’t issue you a credit score, you will need to pay for each one but I do not recommend you do so. Another site I recommend is Identity IQ, this site will provide you with a free 7-day trial where you will have access to all three credit reports along with your three scores. Click here to access the site.
2. Review your positive accounts
Improving your credit does not always consist of negative accounts, positive accounts can be hurting your scores if you are not managing them well. One of those examples is having a credit card balance to its capacity or over the 35% rule of thumb balance to the credit limit.
Example: You have a credit card with a credit limit of $1,000 and your balance is currently $800, your ratio is at 80% and the key is to maintain your ratio at 35% or less which means you will need to lower your balance to $350 in order to maximize your point potential. Simple rule, add your credit card limits X35% and the amount given to you should be your collective balances over a single card or a combination of your total cards.
Another rule of thumb is you want to make sure you have a combination of Installment accounts vs Revolving accounts. This only consists of 10% of your total credit report but it is important to have a combination of both types of accounts in order to maintain a great credit score. If you lack either one, I suggest you apply for that specific type of account and once a single payment has been recorded, your scores will reflect in a positive way.
Your credit history consists of 15% of your credit score which means the older your credit history, the better your credit scores so if your credit is a bit too new, adding yourself to a seasoned card would help boost your scores since you will be increasing the overall age of your credit history.
Wait, what? Add yourself to an authorized user card? What in the world is that? Ok, if this is the first time you hear this verbiage, let me backtrack a bit and explain what an Authorized User account is. An authorized user credit account is an established credit account which belongs to someone else and you are simply asking the owner of the card to add you as an authorized user for the sole purpose of inheriting the cards history (hopefully positive). The entire account will be reported to your credit report and will include information such as the open date, payment history, balance, credit limit etc.. This information will report within 30 days but be very careful when utilizing this strategy because if any negative activity occurs, it will impact your credit this hurting your score.
This is a great strategy to implement and is one of my favorite because you are adding an account with a long term positive credit history thus improving your credit all within 30 days. Good for you!
So, why is improving your credit so important?
There are many reasons to start your journey of a healthy credit score and one of the biggest reason is that credit affects you every single day. It affects the interest rates you pay on credit cards and loans, including mortgages, and can result in higher security deposits for rentals. A bad credit score can also affect your insurance rates and what credit limits you qualify for. The beauty of a good credit score can mean financial freedom where you don’t have to depend on cosigners when applying for a mortgage or any other type of loans.
So, if you need to fix your credit—or simply maintain your good credit—use the 3 steps outlined above. And, no matter what your credit is today, don’t give up! If you build good habits over time, fixing your credit will be a no brainer and you will soon experience what a healthy credit score can do for you.