Everyday tips about credit
Sometimes credit and credit reports can be daunting or even down right scary if you have never dealt with them before. Or maybe you are well versed in credit and always looking for a way to improve it and learn. I wanted to discuss credit and just share with you some great tips that I have learned throughout the years that have helped my clients immensely on their road to great credit. I like to keep my action steps and tips simple so even if you have never dove into your credit report before, you can use my steps pretty easily. Here we go!
Start with the basics! Just run your credit report annually. Each credit bureau gives you one free credit report a year. Most times you have to pay for a credit score from them but the report is free. This is a great practice for so many reasons. Just to familiarize yourself with your report and what kind of information goes on it. And also gives you a chance to check for accuracy. You can also use free services like Credit Karma to keep track from an app on your cell phone.
One missed payment isn’t the end of the world. Say you normally are on your A-game and your monthly bills are paid on the dot. But you had a family emergency and you totally spaced paying your credit card bill! It’s ok! Call your credit card company as soon as you can and discuss with them a “goodwill adjustment”. They will review your history and see that you are a good paying customer and most times consider not reporting your late payment to credit bureaus. Remember to just stay proactive and not let things slide. The more you take charge in your credit the better you can get a handle on it.
Keep balances low. Yes, I know your credit limit is probably over $10k but they really don’t want you to use all that credit up. I like the less then 20% rule of thumb. Only utilize about 20% of what is available. The more credit you have available looks good to creditors that you are not maxing out your credit line and are using it responsibly.
Monthly payments. This drives me nuts! They tell you that your minimum is $25 but most of that goes to interest! Please don’t just make the minimum payment. It’s so much more effective to get a plan in place and a budget to pay off that balance sooner then later. You don’t want to pay the credit company tons of interest. That is your money going down the drain. There is a cost to borrow money and it’s in interest.
Start out small. If you are just starting out establishing credit start out small. Ask a friend, family member or spouse to add you onto one of their credit cards as an authorized user. Pick someone who has great payment history and good credit of course! You don’t even need a card in your name or even use it. Every time they use their card and make timely payments it will get reported as good credit on your report as well. When my husband and I first got married he didn’t even have a credit score yet so I added him as an authorized user to my Macys card. He has been building his own credit ever since and now his score is even higher then mine! This is also effective if you happen to file bankruptcy and having a hard time establishing credit again.
Diversify your credit. This is probably more of the challenging tips due to everyone’s different situations. But I like to put this out there for food for thought. Yes, it’s good to diversify and by that I mean have different types of credit on your report like revolving (credit card), installment (car payment) and mortgage. Like I said not everyone is in the right space to have a mortgage but it can also be a good goal to set. With that being said, you don’t want to over do it with too many of the same account open either. Everything in moderation.
There are so many more tips out there when it comes to credit. But it’s always good to stay on top of monitoring it and striving for the best! I would love to hear your tips and tricks, comment below!