The older I get, the more I wish I was taught more about my finances growing up. Thinking about all of the unnecessary, but fun classes I took in school definitely seem like a waste of time, when we never talked about the really important things that were to come in our adult life like CREDIT. Many of us never knew the doom that awaited us on our 18th birthday, when creditors would begin to send us credit card offer after pre-approve auto loan letter after another. I am one of them. I received my first credit card in my senior year in high school, and it was maxed out by the next month. That credit card haunted me until I was 23 years old. This is when I decided I had to get a hold of my credit. When I started, I realized there are a few things we can all do, that would improve our credit scores in the next 60-90 days. Here are a few tips to increasing your credit score!
1. Obtain & Review Your FREE ANNUAL CREDIT REPORT
The first obvious step is to pull your FREE ANNUAL CREDIT REPORT. Every year you are entitled to A FREE Credit Report. Visit sites like annualcreditreport.com.
Review your credit report and check for errors. Is there any information listed on your credit report that does not belong to you, are there accounts listed that you have paid off already, or are they old? These are a few reasons that would potentially allow you to have items removed from your credit report. This brings me to number 2.
2. Dispute inaccurate Information
Here are a handful of reasons to dispute information on your credit.
Incorrect personal information – Name, addresses, social security numbers, date of birth reporting incorrectly.
Negative items that are beyond the statute of limitations for reporting – There are specific reporting laws with regard to how long a negative item must report on a consumers credit report.
Inaccurate reporting of account or other information – for example, a collection was paid 2 years ago, but it still shows a balance. Or an account was included in a Chapter 7 bankruptcy but it is reporting as a charge off account with a balance still owing.
Mixed or split credit files – for example a father and son have the same name, Sr. and Jr. Or credit from someone who has the same name is on your credit report.
Duplicate reporting of an item – for example two collections for the same debt.
Fraud or Identity Theft information – where you may see inquiries, accounts or collections you never applied for.
Removal of negative notes on your credit score will help begin to increase your credit. You can start disputes through Credit Karma or directly through the credit bureaus. I will leave all the links for each credit bureau below.
3. Monitor Your Credit Report
As I continue down my journey of credit repair, I am learning how important it is to have access to see not only your credit report, but your credit score as well, all the time. You can download apps like Credit Karma as a tool to monitor your credit score. Although, from what I can see, Credit Karma reports a score about 20 points below the score that banks are able to pull for you. That can be a good and bad thing depending on how you look at it. The important thing is looking for any suspicious changes and Proactively handling them.
4. Positive Payment History
Making your monthly payments on time is not only one of the easiest ways to improve your credit but it can also save you money in the long run. Payment history is one of the major factors in your credit score. Many companies now offer cost saving solutions to enroll in automatic bill pay. Although, this is not always the best option for every woman's purse, but it can save you money both in the long term and the short term.
I have recently enrolled in a program called Self Lender. Self Lender has created a way to build positive payment history on your credit report AND Save money at the same time! I have never looked forward to paying a bill until now, because I know at the end of the term, not only do i have a large amount of money saved, it is with interest.
5. Understand Credit Utilization
How much of your credit limit are you using every month? How does it affect your credit? Your credit usage is a numbers game that we all should know and understand It is one of the most important things to understand about rebuilding your credit score. Let me explain:
To calculate your credit utilization simply divide your credit card balance by your credit limit then multiply by 100. The lower your utilization, the better. Low credit utilization shows you're only using a small amount of the credit that's been loaned or allotted to you.
The purpose of a credit score is to predict chances of you falling behind on payments and being able to repay any loans. Higher balances are more difficult to afford and could indicate that you may have stretched your finances thin and will ultimately lower your credit score.
Lets face it, credit isn't fun, but it is vital to your finances. Better credit increases your chances of being approved for not only home and auto loans, but it also opens up better opportunities for small business owners as well. There is no better time to start on your finances than the beginning of the year. Lets really secure the bag.....with interest.