Credit scores continue to astound and confuse consumers more and more, according bankrate.com, as their survey revealed in September 2015, “nearly four in five Americans, 77 percent didn’t with accounts with high outstanding balances hurt their credit scores, even if they pay their bills on time.” While I work directly with my clients in developing a clearer path, understanding, and better habits to forge ahead in their credit goals, I help them find ways to increase their credit scores while in my credit restoration program. In today’s post, I share what you should do when taking a very close look at what your credit scores and what they reveal about you. In my experience over the years of working with clients, credit problems often have an underlying root. Here are 12 Ways to boost Your Credit Scores this Month so you can begin to make a change for the better in your credit situation.
1. Dispute any errors you see on your credit reports. We are in January and every year the credit bureaus provide an annual free credit report to consumers to review their credit status. Go here for request yours, https://www.annualcreditreport.com/index.action
2. Ask for assistance on any accounts that you neglected to pay on time. Scenario: You had a gap in your employment situation and stopped paying a credit card bill on time and it is now in collection. Tip: Generally 90 days of no payment is headed for a charge-off. The next step is a collection reporting on your credit reports and essentially the account is in serious trouble. The creditor could allow you to pay off the balance in remove the bad reporting. You can ask for this, BUT, the key is to get a commitment in writing to get the account removed with the bad history as a result of the paid balance. It can be tricky!
3. Current credit card limits can be deceiving on your credit reports. Pay attention to what are using in any of your credit cards and how the monthly balance is showing up on your credit reports. Balances are a trigger of potential problems to a credit card company when they rise unexpectedly and the limit is exceeded.
Credit card balances can aggravate your credit score boosting efforts if they are high and maxed each month. If your paying on time and not carrying more than 30% of the balance over each month, you could ask for a credit line increase.
4. Acquiring a good interest rate credit card is key to better credit scores. This can be a longer range goal if your just starting out and need to build up your history to gain access to unsecured credit cards. The lower the interest rate, the more buying power you have when using the card. Each time you pay off your balance, the credit card company reports the use to the credit bureaus. The length of time you have used the card, the credit card limit, and how long the credit history is on file is all combined in a strategic mathematical algorithm, the credit bureaus use to rate your relationship with that credit card provider.
5. Minimize credit card use is the true rationale I want to emphasize especially to guard any score increase while getting credit problems related to old accounts and activity. Establishing a true habit of money management is better so that the credit card(s) you may still have can remain in good standing and stay open to help you restore (sustain) your good credit history.
6. Do not close credit card accounts no matter what happens. Old credit history can be helpful in your journey to a strong credit score. You may have a late or two from say maybe a year ago. That late payment loses its power in your credit history with each passing month you got back on track to pay on time. As long as there are no more late payments, that account can be a benefit to get approved for a larger credit line later. If on-time payments for 12 months continue, you are no longer under the same credit risk scrutiny. So that you don’t overspend or max the account, use to pay a automatic bill like cable so that it is used each month and it’s active.
7. Paying bills on time is imperative. A skipped payment may seem like “no big deal” but it will cost you royally. With credit cards the interest accrues daily, so a missed payment is detrimental as the interest could carry you over your limit, along with the fees that a late payment carries. The added killer is the score hit, which a 30 day late penalty could destroy your efforts to boost your credit scores because the late payment reports to the credit bureaus.