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Savvys, if you do not have great credit then building up your credit score should be on your list of priorities. Having a poor score can negatively impact different segments of your life. According to the Journal of Business and Psychology, poor credit can affect you getting an offer letter for a new job. In addition to affecting your employment, poor credit can effect if you will be able to get a business loan, the amount that you pay on a monthly note and it can even affect you meeting a significant other if the other person puts good credit as a priority for selecting a mate. Do not let your score prevent you from having the lifestyle of your dreams. Change your score by implementing these changes below and you will see an increase in six months.
Credit Score 101:
For those of you young Savvys that may not have a full comprehension of credit here is a quick crash course. Your FICO score is used to determine your credit worthiness. The FICO score ranges from 300 to 850 with 850 being the best score. According to Clark Howard, your credit score is calculated based on the following. There are three credit bureaus that have your score and they are Equifax, Experian, and TransUnion. Your score may vary based on the which one you request. The Credit Score Mix chart below gives you an idea of how your FICO score is calculated.
Credit Score Mix
35%: Your Payment History
30%: Amounts Owed
15%: The Length of Your Credit History
10% : New Credit
10%: Credit Mix
Steps to Increase Your Score
Know Your Score
In order to improve your score, you have to know where your starting point is and that means you have to know your score. No need to sit there an estimate your score. You can place an order for a copy of your credit report that includes your FICO. Besides, not knowing your score can cost you thousands of dollars in notes with high-interest rates.
Check your credit report for errors. The information that the creditor provides is called Tradelines. Take the time to make sure that everything that shows up on your report belongs to you and is accurate. According to a study by the Federal Trade Commission, 5 percent of consumers found errors on one of three credit reports. Savvys, know your rights. The Federal Credit Reporting Agency act gives you the ability to dispute any errors that you find on your report. If you see a tradeline that does not belong or has inaccurate information you can do the following listed below.
Request a Copy of Your Credit Report:
Experian: 1-888-397-3742, www.experian.com
TransUnion: 1-800-916-8800, www. transunion.com
Equifax: 1-800-685-1111, www.equifax.com
Steps to Dispute an Error on your Credit Report:
You can do one of the following in order to report an error on your report. I recommend option one.
Notify the credit reporting agency in writing that a tradeline on your report is inaccurate. Remember that these agencies get letters all the time, therefore keep your letter right on point and provide details. Include any supporting documentation that you have to support your claim. Include a copy of your report and make sure that you highlight the errors. In your letter make sure that you state that attached is a copy of your report and the errors are highlighted.
The credit reporting agency will then reach out to the creditor and request that they investigate your claim. If you are correct, the creditor will make the necessary adjustments. The credit reporting agency will send you a letter stating their findings and will provide you with a free copy of your updated credit report.
You can send a letter directly to the creditor stating the errors.
Make Your Payments On Time
Making your payments on time is a big part of creditors making a decision to extend credit to you. In order to increase your score be sure to make timely payments. If by chance you will not be able to make a payment on time be sure to reach out to your creditor and communicate your dilemma. If the payment due date does not work for you at all see if there is a way that you can change the due date permanently.
Reduce Your Balance
Making sure that you keep your balance under 9% is a sure way to increase your credit score. For example, if you have a credit line of $1,500 and you only use 9% ($135) this will surely help you increase your score. Managing your credit in this way tells creditors that you are responsible and know how to manage your funds.
Savvys, in order for your score to increase you have to do all of these at the same time. For example, you cannot have a total of 3 cards and two of the cards are under the 9% and you make timely payments, but the 3rd card is way over the 9% balance and you make late payments all the time. However, you can work your way up to getting everything on track by making a plan to start making the payments on time for all your cards and then work on getting those balances down.
Savvys, If you know someone that will be able to benefit from this article please share it. If you were able to increase your credit score please share with us in the comments section below. Stay Savvy.