Funny how your credit score can be this mysterious, intimidating thing. At our house, we don’t use credit cards, we pay our bills on time, etc. IN THEORY, our credit score should be A-OK. But I’m in no hurry to crack open my Experian report to confirm my FICO score. It freaks me out.
Other folks don’t have a choice. If you have been turned down on a loan, or maybe you got approved but with crappy conditions and interest rate, your credit score is something that’s right up in your face.
Like anything else we build up in our minds, though, your credit score – and fixing it if necessary – doesn’t have to be this huge intimidating thing. According to DailyFinance.com, there are “7 Ways to Raise Your Credit Score in 2016.” Let’s hit the highlights…
- Get your credit report, and report any errors you find: What kinds of errors? Read the piece.
- Get a new credit card, and use it sparingly: Utilization rate is very important – your actual debt versus your debt limit. If you can raise the limit by getting another card (and not using it!!) you can lower your utilization rate. (I did not know this!)
- Make payments more frequently: Your credit report is one of those “snapshots in time.” With more frequent payments, you’re more likely to have a better-looking snapshot.
- Make larger payments: At least, make more than the minimum payment.
- Pay off the card that is closest to being maxed out.
- Become an authorized user: Sort of like having your dad co-sign for your first car, I think. Piggyback on someone else’s credit score. All the usual risks apply – oh, you bet they do!
- Commit to keeping it simple: Make your payments, carry less debt and don’t have a bunch of credit cards!
So, a plan, some discipline, and a few tricks. Not so intimidating! There is a lot more info at the original article, so check it out! Are you going to get a grip on your credit score this year? Have you already done it? How did it go? Let us know over at the MindField Online Facebook page, and have a great weekend!
I remember my first credit card – an Elder-Beerman’s department store charge card with the astronomical limit of $500. I had just turned 22, and by age 22 and 1 month my ex had maxxed the thing out. Talk about starting your credit history with a bang!
People that age are called Millennials now, and many of them are making the same mistakes, according to a sobering but helpful article entitled “Credit Card Mistakes Are Costing Millennials Plenty: What Not to Do.” Here are the common pitfalls the Millennials find themselves in..
- Applying for too many cards and too often: You need a certain level of income to qualify for a credit card. If you don’t have it, you are rejected, and that goes against your credit score. Second, after a rejection, too many young folks just walk to the next kiosk in the mall and apply for a different card. Applying too often is another stain on your record. This article suggests waiting 6 months to a year between applications.
- Avoiding credit cards altogether: Surprisingly, over 30% do this. It’s not enough to avoid bad credit, you also have to build GOOD credit. Having a credit card with a modest balance and making regular, timely payments is how you get auto loans, mortgage loans and good insurance rates later in life.
- Taking it to The Max! Maxxing out your credit card suggests you are not in control. It’s also costly. If you hit the max, most credit cards will hit you with punishing interest rates of 25% or more! And yet, it happens, which is one reason why 21-25 year olds have $13K in debt, and by age 30 it has TRIPLED.
- Last-second payments. Late fees, man, determined partly by your balance. High balance late fees hurt! The good news is that if it’s a rare occurrence, you have a very high chance (over 80%!) of getting the late fees waived.
So, the hazards are real. Best to be aware of them, and watch your step, because it can take YEARS to straighten this stuff out (trust me.) Be sure to read the original piece for more info about services that can help you stay on the straight path. How about you? Are you of that age, making common mistakes? Or was that you 10 or 15 years ago? How did you pull it out? Let us know over at the MindField Online Facebook page!