4 Hacks to Raise Your Credit Score

Your credit score. Chances are you either love it or hate it. It’s either the greatest thing in the world or a total hindrance. Or, maybe you don’t really know enough about your credit score for it to make an impact on your life.

As a whole, Americans’ credit scores are beginning to increase but our knowledge of credit and how it works is declining. A recent survey from credit scoring company Vantage Score and the Consumer Federation of America, found that 32% of the people surveyed didn’t know they had more than one credit score.

Let’s forget about how many credit scores we have for a second and answer a very basic question: What is your credit score? 

Your credit score is a three digit number ranging from 300 (the lowest possible score) to 850 (the highest score). Lenders use your credit score to make decisions about whether or not to offer you credit – such as a credit card, car loan or mortgage. Your credit score is also used to determine the terms of the offer – such as what your interest rate will be.

Your credit score is calculated by looking at these categories:

  • Payment history
  • Your debt-to-income ratio
  • Total debt
  • Length of credit history
  • Types of open credit
  • Public records (such as bankruptcy)
  • Number of inquiries on your credit report
  • New credit

So, what is considered a good credit score? 

The average credit score in the United States ranges between 670 and 710. According to Experian, a “good” credit score is anything that falls between 661 and 780, which is about 38% of the population. Usually, if an applicant falls in that “good” credit range, they’re likely to be approved for credit at competitive rates.

Now that we know what a credit score is and what classifies as a good one, the next question to look at is: Why does your credit score matter? 

Think of your credit score like a report card you used to get while you were in school. Your report card measured your progress during the school year, and your credit activity puts you into a scoring range. But, unlike grades – credit scores aren’t stored as part of your credit history. Instead, your score is generated each time you apply for credit. Fact: It actually negatively impacts your credit score if you have multiple inquiries in a short period of time.

What are your major financial goals? Buying a home? Buying a car? Chances are, your credit is likely going to be a factor in framing that financing picture. Your score will actually tell a lender whether or not you qualify for a loan and how good the terms of the loan will be. For instance, the lower your credit score is, the higher your interest rate on a loan will be.

If you’ve looked at your credit report and you’re surprised to see it’s lower than you thought, there are simple ways to fix that:

  • Pay your bills on time. That goes for ALL your bills – not just credit cards and loans. Fact: Payment history is the most heavily weighted factor of your credit score. It makes up 35% of your total score.
  • Keep your credit card balances low. Credit history accounts for 15% of your credit score, so keep those old accounts open even if you don’t use them.
  • Space out your credit applications. Each time you apply for a line of credit, the inquiry is noted on your credit report. One or two inquiries aren’t a huge deal, but when you have a bunch within a two year period, it can cause your score to fall.
  • Mix up your credit. Your credit mix, or the types of credit accounts you have, makes up 10% of your credit score. Basically, lenders want to see that you can use different types of credit responsibly.

Credit doesn’t have to be scary or overwhelming. There are many responsible ways to start out slowly and build worthwhile credit for the future. First Financial can help! Are you looking to build or establish credit? We have a number of ways to start you on the right path. Stop by one of our branches today or give us a call. You can also check out our credit management guidebook on our website, for some additional tips.

3 Bad Choices that Could Damage Your Credit Score

Your credit score is a big deal. That number decides what kind of loan you’ll be able to get and what interest rate you’ll have to pay. If your credit score is low, you’ll need to find ways to raise and improve it. If your score is good, here are three things you may want to avoid in order to maintain your high credit rating.

Cosigning a loan: You’re a nice person and you do nice things for people you care about. In reality, you should really never cosign someone else’s loan. If the borrower starts missing payments, your credit score will take a big hit. The last thing you want to do is be on the hook for someone else’s car payments, personal loans, or credit cards.

Closing a credit card account: Maybe you have a credit card that was just used to build credit or have in case of emergencies. You may have paid if off and decided to stop using it, but be sure you don’t close that account. That card’s credit history is good for your credit score. Also, closing the account will lower your amount of available credit which could negatively affect your debt utilization ratio. Closing a credit card account is one action that can damage your credit score in two different ways.

Not looking for errors: Always keep a close eye on your credit score. If you haven’t looked at yours recently, check out annualcreditreport.com. If you don’t keep an eye on your credit report, you could have your identity stolen and not even know it. Even if isn’t the case, there could still be inaccuracies. The day you find an error on your credit report that is negatively impacting your score, is the day you’ll be extremely happy you checked.

If you’d like more insight into your credit score and managing your credit – view our credit and debt management guide here.

Article Source: John Pettit for CUInsight.com

Don’t Let These Mistakes Ruin Your Credit Score

When it comes to your finances, your credit score can be a big deal. A good credit score can mean big savings (or costs) if you take out a loan. Good credit can also mean lower costs when you get car insurance in some states.

If you have good credit, you’ve worked hard to manage your finances and your loans in a way that shows you are responsible. You are proving that you are a solid risk. But what happens if you slip up? How much could that ruin your score?

According to the major credit bureaus, the damage affects different people differently. One late payment will affect a person with a lower score, but it’ll have a much bigger impact on someone with a really high score. That’s right: if you have great credit now, a mistake could mean a bigger hit to your credit score. Someone with mediocre credit won’t see the same impact as the result of a mistake.

Do you have an excellent credit history and want to keep it that way? Here are some things to avoid if you want to keep that credit score in the good to excellent range:

Missed Payments

The biggest factor in your credit score is your payment history. One missed payment can tank your credit score, if you have excellent credit – by as much as 100 points, according to Equifax.

The longer you wait to pay your bill, the worse the impact. If you are just a couple days late, you might not see a huge change. However, once you reach that 30-day late mark, it’s a big problem.

Do your best to plan your finances so you make your payments on time and in full. Easier said than done, but it’s much easier to stay on track if you have a budget. If you don’t, get working on one. Check out our free budgeting guide.

High Credit Utilization

If you have excellent credit, there’s a good chance you carry small balances on your cards — if you carry them at all. Best results come when you use 30% or less of your available credit each month.

But when you start charging, and that credit utilization number starts to climb, you can see changes to your credit score without realizing it. The closer you are to your limit on the credit cards, the more it impacts your score.

If you end up over the limit on your cards, then your score will suffer. Try to continue keeping balances low. Better yet, pay off your cards each month if you can and avoid paying the interest.

Cosigning on a Loan

One day you may want to help your child or sibling by cosigning on a loan. It might seem like a good idea to cosign on a loan to give them a boost, but think twice before you commit.

Your credit is on the line as soon as you sign on the dotted line, because you accepted responsibility for all payments as a cosigner. Plus, it will look like you have that debt — even if you don’t, and that can affect how much you can borrow if you were to, say apply for a mortgage on a dream home. If the borrower misses a payment, that’s on you as well. You can see your credit score fall.

And if you do cosign, make sure the borrower keeps you up to speed. It may not be ideal to make their loan payments, but at least it can save your credit if you do.

Article Source: Miranda Marquit for Moneyning.com

4 Ways to Quickly Raise Your Credit Score

1. Don’t miss a payment.

This is the number one thing that credit bureaus look at when determining your credit score. Your payment history makes up 35% of your FICO score. If you have trouble remembering to pay your credit card on time, set a reminder on your phone or automatically schedule your payment to be deducted from your account on the same day each month.

2. Pay as often as you can.

Going a step further, pay on your debt as often as you can. Just because your payment isn’t due for 3 weeks, doesn’t mean you shouldn’t go ahead and make a payment. You don’t know when your credit card company reports your balance to the credit bureaus, so try to keep your balance as low as possible.

3. Reduce your debt.

Even if you’re making regular payments on your credit card, the goal is to get it paid off. If you’re keeping a balance from month to month, you’re getting charged more interest than you should be. Try and pay off your balance each month, but if that’s not possible, keep your balance as low as you can and your credit utilization under 30%.

4. See if you can increase your credit limit.

This is more of a trick than a solution, but it can work for you. If you’ve used $950 on a $1,000 limit, try calling your credit card company and getting that limit raised to $2,000. Then you’ve got a card that’s only 50% utilized as opposed to one that’s nearly maxed out. It doesn’t hurt to at least ask!

Learn about managing your credit and reducing debt with our guide.

Article source: John Pettit for CUinsight.com

 

Should You Pay for Credit Repair Services?

Should You Pay for Credit Repair Services? Probably not.

Call it a coincidence. Call it savvy marketing. Whatever you call it, there always seems to be a spike in credit repair advertisements around the time the first holiday shopping bills arrive. Maybe you’re staring wide-eyed at a balance that’s higher than you expected, wondering how you’re even going to keep up with the minimum payments. This kind of uncertainty can the stage for bad decisions. So, before you scramble and sign up for credit repair services, take a deep breath and realize you have more control than you think.

Risk vs. Reward: Is credit repair worth the cost?

It’s important to remember that some credit repair services are legitimate businesses, able to follow through on their claims. Unfortunately, the reputable companies reside in a corporate landscape littered with scam artists and opportunists. If you’re willing to devote enough time and research, it’s possible to separate the upstanding services from the scams, but as NerdWallet columnist Liz Weston points out, “If you’re able to do that kind of research, then you can certainly figure out credit repair and do it yourself.”

While the trustworthy credit repair companies aren’t necessarily too good to be true, there’s a good chance they’re too costly to be worth it. When you consider that many of these services charge monthly fees ranging from $30-$100, the boost in your credit rating may not justify the ongoing expense.

Facing credit challenges? Your credit union can help.

Good credit isn’t the result of tricks and trade secrets. It’s established by applying solid financial habits over time. The same holds true for credit repair. While there may be some additional steps required to clean up your credit report, rebuilding good credit requires a consistent commitment to responsible money management.

Credit unions exist to ensure the financial success of their members. Educating people on proper credit management is part of that mission. If you’re drowning in debt and struggling to regain your financial footing, your credit union could be the lifeline you’re looking for. Discussing your current challenges with one of the credit union’s representatives can be the first step toward putting those struggles behind you.

Repairing damaged credit is no walk in the park. But with a little hard work and dedication and the guidance of your credit union’s financial professionals, you can be on the way to reclaiming the good credit you deserve.

Need a little help understanding your credit score or want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment. We’ll help you get back on track!

Check out out guide for understanding your credit score.

 

Is Your Credit Score Affecting Your Quality of Life?

The American dream is usually characterized as working hard from the bottom up, making a good salary, buying a house, and having time to create and enjoy your family life. But the vision doesn’t always come together so neatly – despite strong buyer demand, the inventory of affordable, available starter homes is relatively low, and to secure a mortgage, you need a strong credit score (something that not all Americans have or understand).

Even in the face of this unfamiliarity, most people realize that your credit score is the main determining factor in whether you qualify for a loan, and what rate you’ll pay on that loan. However, your credit score has the power to affect your life in far more than just one area — it can make or break your vision of the American dream on all sides.

JOBS

Though not all employers will check your credit score before hiring you, and most employers won’t rule out a candidate just because they have a bad credit score, your credit score could have an impact on how you’re seen by prospective employers. If they run a report and see that you’ve had a checkered financial history, and realize you’ll be handling financial responsibilities in the office, they may believe you’re underqualified, and move onto other candidates.

The good news is employers aren’t always allowed to view your credit report. According to Credit Karma, “The short answer is no, credit bureaus do not share your credit score with employers. Subject to restrictions in state law, employers may, however, ask to see your credit report. When your information is requested, credit bureaus will send over a variation of your credit report meant specifically for employers.”

APARTMENT RENTALS

Similarly, your credit score affects housing in more ways than solely influencing your mortgage rates and availability. Landlords will frequently check prospective tenants’ credit scores before choosing whether to rent the apartment to them. Obviously, if a tenant has a history of missing payments, or being late with payments, they’re going to be secondary options to tenants with strong financial backgrounds.

BILLS AND PAYMENTS

Your credit score could even affect how you’re expected to pay for utilities — especially when moving to a new location. When turning on utilities for the first time, a utility company may require you to leave an upfront deposit. If you have a high credit score, they may waive that deposit, but they may charge you more if your credit score is especially low. According to the FTC, “Like other creditors, utility companies ask for information like your Social Security Number so they can check your credit history — particularly your utility payment history. A good credit history makes it easier for you to get services. A poor credit history can make it more difficult.”

RELATIONSHIPS

Your credit score can even affect the quality of your relationships. It’s no surprise that money and financial issues are the biggest causes of couples’ fights (and breakups). If your partner is fiscally responsible, but you’ve had a more questionable history, it could lead to bigger arguments. For example, will you be willing to buy a house together? Will your credit score negatively impact your joint mortgage rate? Will you be paying off your debt together? Even a little money-related stress can quickly escalate into a bigger problem.

HOW TO IMPROVE YOUR CREDIT SCORE

If you’re reading all of this and feeling nervous about your own credit score, take a deep breath. Even if your credit score isn’t as strong as you’d like it to be, there’s always time to revise and improve it. Your first step is to know what your credit score is – and thankfully, you can check it for free. Once you know your credit score, you can take the following steps to improve it (and along with it, the quality of your life):

  • Understand your weak points. First, understand why your credit score is where it is. Is it because you’ve accumulated a lot of credit card debt? Is it because you missed several payments? There are many reasons here, but almost all of them can be corrected with better habits in the future.
  • Avoid new credit or debt. Don’t apply for any new loans or credit cards, this could tank your score even harder. Instead, focus on the lines of credit you already have.
  • Pay all your bills on time. This is the most important factor to focus on – from here on out, make sure you pay all your bills in full and on time. If you need to create a strict budget to do it, then do it. Without a steady history of on-time payments, you won’t be able to lower your score.
  • Start paying off your debt. Finally, work to start paying off your debt. Consider moving to a lower-cost area, taking on a second job, and cutting any unnecessary expenses. You can even call your credit card companies to negotiate for a lower rate. Once your debt totals start decreasing, you’ll feel happier and more optimistic as well.

Unfortunately, there’s no quick fix for a bad credit score. It takes years to build an initial score, and months to years to make a significant change. You’ll have to be consistent and patient if you want to succeed, but as long as you stay committed to your financial future, it can be done.

Need a little help understanding your credit score or want to sit down with a First Financial representative to help with debt management strategies? Stop into your nearest branch location, email marketingbd@firstffcu.com, or call 732-312-1500 to schedule an appointment.

Learn to manage your credit and reduce debt with our easy guide.

Article Source: Anna Johansson for NBCnews.com