What can you do to improve your credit? Here are a couple tips to get you started…
- Start now! Time is a huge advantage to have on your side. Start making small changes now and working slowly on credit issues before you need the credit. If you wait to resolve credit issues or establish credit history until you need the card or the loan, it will be too late. Start now and keep at it. A little bit, over a period of time, can go a long way.
- Live within your means. You can’t start repairing the mistakes if you’re still currently making them. Spend less than you make, so you will have some money left over for emergencies and to start handling the un-handled emergencies from the past.
- Use credit to earn credit. You can’t improve your credit if you aren’t using any. Look for opportunities to utilize credit, whether you need to or not. If you’re able to purchase a car for $5,000 cash, don’t. Set the $5,000 aside in a separate account and make payments on a revolving loan from that money, to establish a good payment record and length of payment history.
- Using credit doesn’t have to cost extra. Using credit is not the same as carrying a balance. Spend using a credit card the same way you would spend using a debit card. Essentially, you’re just “running” everything thru your credit card account and paying it off in full once a month, instead of making each individual payment via debit each time. Paying in full each month gives you the advantages of credit history without having the disadvantage of paying the interest rate.
- Credit repair takes time. Be patient. You won’t see instantaneous results but it WILL be worth it.
- Pay all of your bills on time, always, from now on. No excuses. Just pay your bills.
- Set up auto payments for each of your accounts, so that, regardless what’s happening in your life, even if you fail to make a “real” payment, your account will automatically post, at least, a minimum payment, so you don’t get ding’ed for missing a payment all together. Whether you have this in place as your primary method of payment or whether you set it up just as a “safety” option, to be utilized if/when you haven’t otherwise paid, it doesn’t hurt to have it set up. It’s a nice safety net so you don’t get hit with a late payment on your credit report during that mud season that you went to Costa Rica or during that month where work was just crazy or during that time you had “pregnancy brain” and things were just left undone.
- Don’t let disputes go to collections. Whether you agree with the insurance company or not, whether what the cable company did was fair or not, regardless… it’s not worth letting it go to collections! Never let something go to collections. It’s not worth it!
- Pay down and spread out your balances. It’s better to have smaller amounts on multiple credit cards than it is to have one card close to max’ed out.
- Use your cards every so often. Cards that haven’t been used in years aren’t hurting you but they’re not doing much good either. At least once a year, use each account here or there to keep it active. If the credit card company closes the account due to inactivity, you lose the (positive) payment history and you lose the length of the account, so just charge one tank of gas or one dinner out here or there to be sure the account stays open.
- Apply for credit sparingly. It’s not a huge deal if you need to apply here or there but every little bit counts so don’t apply excessively.
- If you are planning to make a large purchase like a home, do not do anything within the weeks and months prior to your purchase. Do NOT buy a new car, do NOT run up balances on credit cards, do NOT finance a new mattress or new appliances for your new home, etc.
- MONITOR YOUR CREDIT! The only thing worse than having to deal with the irresponsibilities of your own past is having to deal with the irresponsibilities of someone else’s past. Pull your credit, for free, at least once a year. There are 3 credit bureaus you can pull from. Some people like to pull all 3 on the same day once a year. Other people like to spread them out pulling one every 4 months. Regardless, be sure to pull from each of the three bureaus each year. If you find something that is not your history, report it immediately.
Want more detailed info on credit reports? Have a question on one of these tips? Contact Kate (907.333.3593 or [email protected]) just to chat… or ask Kate for the phone number of a credit specialist. While I do deal with financial info surrounding real estate often, I’m not an expert. I’m just a real estate broker with college degrees in Finance and Business Management. If your situation needs more detailed attention, I can suggest some experts who work on credit and financing 24/7 for you to get in touch with.