Credit score… it’s one of those things that makes you or breaks you. Growing up I use to hear, “No credit is as bad as bad credit and you can’t get credit unless you have good credit.” WHAT!? Your credit score tends to say a lot about you, whether you want it to or not. So it’s important to monitor your credit report because mistakes do happen. If you’re credit score is 720 or above, you are good to go. If not, let’s chat!
You and Your Credit Report
There are many factors that go into creating your credit report, inquiries, account history and fraud alerts are just a few. Inquires allow you to see what companies are pulling your credit report. Account history is all of the credit lines you have. This means credit cards, loans, information on payments, negative activity and even sometimes accounts that are not yours show up. It’s important to review your credit report on a yearly basis or prior to any big purchases, this way you can ensure you’re in good standing.
You made a mistake... It happens
Mistakes are going to happen, but it doesn’t mean it’s the end of the world. It just means you’re going to have to work a little bit harder. Let’s say you have a late payment history, you filed bankruptcy and you’ve been in collections for a few things. Your credit score is going to drop and these items are going to appear on your report for roughly 7 years. That might seem like the end of the world to you, but it’s not.
If you dwell on these items, you’re going to continue to lower your credit score. Instead, focus on the things that you can control in the moment, good credit habits. These include, making your payments on time, not using 100% of the credit line offered to you, and making sure your checks are not bouncing. If you can focus on things that are positive to your account you will be boost your credit in no time.
There are TONS of myths out there when it comes to boosting your credit score. For instance, the more accounts I open the more my score will increase or signing up for quick fixes you see on late night commercials. These are all myths. There is no such thing as a quick fix, improving your credit score will not happen overnight. Instead take the steps like I mentioned above to help improve your score;
- make your payments on time
- limit the amount of credit you are using
- keep from opening new accounts
Often time, people feel the more accounts they have, the more their score will increase. Then, they hear the opposite and start closing accounts to improve their credit score. Both of these strategies are wrong. Opening and closing accounts affects many areas of your credit score and therefore can have a negative effect. If you are rapidly opening accounts, your credit is being examined which is a hard inquiries and hard inquiries dock points from your credit score. Likewise, if you are rapidly closing accounts, you might be raising your credit card utilization ratio and that will leave a negative impact on your credit.
So… what do you do?
Reevaluate what is going on with your credit cards. Do you have too many? If you have more credit cards than you need, come speak with a TFCU representative and see how they can help you eliminate the cards which are not useful to you. Don’t rapidly start closing accounts because that could hurt you.
If you are just starting in the world of credit, find the card that best suites you. Maybe one with great reward points or a low interest rate. Whatever it might be apply for it and use it.
A tip to remember is to space out any credit card account openings or closing.
There is no quick fix!
While some of these gimmicks and ads might sound great, there is no quick fix to improving your credit, just hard work and determination.
For more tips on building your credit make sure to read TFCU's Using Credit Wisely Guide.