Category: Building Your Credit

Build Credit With Holiday Spending

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Holiday Shiopping

It’s never too early to start planning your holiday spending budget. In 2014 average shoppers around the country were on pace to spend a whopping $861 on holiday gifts alone. With an expense that large, shouldn’t you get something back in return? (aside from the joyous feeling of gift giving of course!)

Truth of the matter is, if done correctly the holidays are a fantastic time to help build your credit and increase your score. Sure you can apply for layaway at Wal-Mart, bust out your Discover Card, or even put some of your spending on your hefty store cards (it’s about the only time you use them anyway,) but these methods can sometimes hurt your score, especially if you start to rack up your balance. So what are the best methods to build your credit during the holiday season? We recommend secured cards and a Fingerhut account.

Building Credit With Secured Credit Cards

Secured Credit Cards have all of the benefits of a regular credit card without most of the risks. A Secured Credit Card works just like a regular credit card. You use the card to make purchases and pay them off each month. They’re accepted everywhere credit cards are, the only difference between the two is secured cards are backed by the consumer. That means you decide how much of a credit limit you want by putting your own money into it. Once you close the card out in the future, your money will be returned to you.

Secured cards were created solely for building credit. Most cards don’t require you to have a good credit score (or a credit score at all for that matter.) Just like any credit account, you will have to pay on time each month, and if maxed out, it will bring down your score. Make it your priority to try and stay under 30% of your credit limit and pay off your balance at the end of the month.

Secured credit cards hold benefits over regular credit cards. When getting approved for a regular credit card or a loan, your credit score will always drop. This is because the creditor is unsure of how you will use your new line of credit. A few months of on-time payments will see your score bounce back to normal or even increase. Since the consumer is the backer of secured cards, there won’t be an initial decline in score, meaning your score won’t suffer for months while you struggle to bring it back to normal. Regular credit cards will also create a hard inquiry on your credit report, bringing your score down a few points regardless of being approved. Most secured cards will not create a hard inquiry and scores won’t be dropped. Better Qualified has a page of recommended secured cards for you to choose from

After making holiday purchases on your secured cards, always be sure to:

  • Pay your balance off or down to 30% or lower
  • Always pay on time
  • Never max out your card

Spend and Build

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If you’re looking to incorporate building your credit score into your holiday spending this year, then now is the time to start. Another recommendation to help build your credit this holiday season is the Fingerhut Credit Account.

Fingerhut has been around for 60 plus years as a catalog retailer. Fingerhut now sells its thousands of products online to its members. With Fingerhut you’ll be able to find all of those name brands available at Wal-Mart, Amazon, and Target. Using a Fingerhut Credit Account to do your holiday shopping will be the most beneficial to your credit in the long run.

Fingerhut makes it easy to do your holiday shopping on their site, all while building your credit up.

Things People with Good Credit Have in Common

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What_people_with_good_credit_have_in_common

Good credit is not a commodity to be bought or sold; it’s something which has to be cultivated with time. All it takes is the right strategies and financial moves to acquire a good credit rating and its associated perks.

Your credit score falls anywhere between 300 and 850. The higher your score, the lower risk you are in the eyes of credit reporting agencies and lenders. Similarly, the lower the score, the riskier you are. While a good credit score can be considered anything over 720, a low credit score is permanent and can be changed with some hard work and good tactics. What are these tactics? Here are some financial moves people with good credit consistently make:

Use Available Credit Sparingly

use credit sparingly

The amount of money you owe in relation to your credit limits helps determine your FICO score. This is known as ‘credit utilization’ and people with good credit don’t usually max it out. In fact, they keep their utilization limits rather low.

People with good credit make it a point to pay their bills on time every month. FICO credit scoring scale considers your payment history to be 35% in determining your score. Pay your bills on time before your due date to improve your score.

Stable Credit History

good credit sparingly

People with good credit have a long history of taking their debts seriously. They have proof of paying their bills in full and on time and are never on the lookout for how to make $5000 fast for some unexpected expense. Patience is key to build a positive credit history. The longer accounts are open and in good standing, the more positive weight they will hold on your credit.

A Mix of Credit

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FICO considers your mix of company accounts, credit cards, mortgage loans and installment loans while determining your credit score. Those with various types of open credit like car loans, credit cards and mortgages have the best scores. So diversifying the type of credit you use proves helpful to you.

No Frequent Opening or Closing of Accounts

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Frequently opening and closing accounts will cause your credit utilization ratio to change and almost always bring down your score. Every time you open a new account, your credit will automatically drop. The credit bureaus are unsure of how the new account will be used. After several months of on tie payments you will see your score bounce back.
Closing old accounts will also drop your score because your utilization and credit history are changing. Often times those old accounts in good standing are your super star accounts, giving you the best positive credit. You should only consider closing old accounts if your card has outrageous annual fees or interest rates.

Remember, you can’t get a good credit score overnight. No matter what your financial situation may be, you need time to prove your creditworthiness. Patience and good practice will increase your score on your journey to the 700 club.

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How to Build Your Credit From Scratch

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Build Your Credit From Scratch

From Zero To Hero

Consumers who have no credit often have a hard time getting approved for loans. If you are one of these individuals then you probably already know this. Normally you’ll need a credit card or loan in order to establish credit, yet you need established credit in order to get approved for a credit card or a loan. Sounds almost like a catch 22.

Credit can be tricky, but never fear! There are ways to build your credit from the ground up without hopelessly applying for credit cards only to keep getting declined. First, let’s take a gander at the credit score influences to better understand what makes up your score.

How are Credit Scores Generated?

What Determines your credit score? (Source myfico.com)
What Determines your credit score? (Source myfico.com)

A couple of months ago we wrote an article (and released a video): What Makes Up Your Credit Score. In the article, we went over the 5 main factors that are responsible for generating your credit score. They are as follows:

  • Payment History (35%): Make your Payments on time. Just one late payment will bring your score down drastically and can go against your credit score for up to 7 years!
  • Amounts Owed (30%): Credit utilization plays a big factor when it comes to determining your score. Best practices say you should use your cards regularly, but never go over 20%-30% of your credit limit.
  • Length of Credit History (15%): Try your best to keep cards open for as long as possible. Closing old accounts will cause your utilization to rise and credit history to shorten.
  • Variety of Credit (10%): Having a variety of credit shows the credit bureaus that you can handle different types of credit. This is something that should be obtained over time.
  • New Credit (10%): Any new credit account will drop your score simply because the bureaus aren’t sure of how well it will be maintained yet.

Now that you understand the basics of scoring your credit, let’s start focusing on what we can do to build your score.

Check your Credit Report

Check Your Credit report

In 2013, a study by the FTC found that 1 in 5 consumers had errors in their credit report. Your credit report should be checked on a regular basis. Every consumer has a right to a free credit report from all 3 bureaus. Go to annualcreditreport.com and check to make sure everything is reporting correctly. These reports won’t give you a credit score, just the history (that’s alright though, if you have no established credit you won’t be able to generate a score yet anyway.)

Apply for Cards

build your credit from scratch apply for cards

Without any established credit, chances are you’ll get declined for most credit cards. Luckily, there are other options for people with no credit.

Secured Credit Cards: Secured credit cards are credit cards that are backed by a cash deposit. The credit limits are usually low (only a few hundred dollars) and you’ll get the deposit back once you close the card. Once backing your secured card, you’ll use it just like a regular credit card. Pay of the account each month, don’t max it out and make sure you make on time payments.

After a couple months of use, the secured card should generate you positive lines of credit. At this time you can graduate to a regular unsecured credit card. You can obtain secured credit cards from your bank or our website here.

Become an Authorized User: You know that family member or friend you have with immaculate credit? If it’s okay with them, you can become an authorized user on their account. After becoming an authorized user, your credit report will start show the said account, helping you generate some positive credit!

Student Credit Cards: Student credit cards are great options for a young person looking to start building their credit. Although the credit limits are usually low with a high interest rate, the acceptance rates are high, allowing you to build credit at a young age.

Retail Cards: Retail store cards can help consumers save money at their favorite stores and are pretty easy to get approved for. There are some drawbacks to retail store cards though. Aside from the fact that you’ll have to go shopping regularly, they usually have a small limit with above average interest rates.

Get a Cosigner: If you don’t like the previous options, you can still obtain a regular credit card with the help of a cosigner. Just know you will be partially responsible for the fate of your cosigner’s credit. Any derogatory remarks you make on the cosigned account will also appear on your cosigner’s credit report, so make sure you always pay on time and keep your utilization low.

Use Best Practices

build your credit from scratch. use best practices

After getting your card, make it a point to use it correctly with these best practices:

  • Use your card regularly: The credit bureaus want to see you use your card (just make sure don’t live beyond your means and charge what you can’t afford.) If you don’t use the card the lender may close it due to inactivity, which will cause a drop in your score.
  • ALWAYS Pay On Time: Late payments are the #1 reason for declines in credit scores. They’ll drop your score and go against your credit for years. Make sure you always pay on or before the due date each month.
  • Pay Off the Balance Every Month: Pay off the balance so you don’t get killed with interest. Doing so over a period of time will also generate you a good credit score.
  • Keep Your Balances Low: Consumers with the best scores have them because they keep their balances between 1%-10% every month. Try to replicate their practices and give yourself a limit of 30% or lower of your high credit limit and NEVER max out!
  • Keep Accounts Open: Old credit cards aren’t like old appliances. The older they get the more beneficial they are to your credit. Try to keep your old accounts open as they are helping your credit the most.

Monitor Your Progress

You’ve educated yourself, you’ve gotten your first card and you’ve learned the best practices, now’s the time to watch your score go sky high. Watching your credit score rise from scratch can be fun and exciting. Enroll with a credit monitoring program to ensure everything is still reporting correctly and make sure you make good use of the best practices above in your journey to the 700 club (or higher!)

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The Right Steps to Applying for Student Loans

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Right Steps to Applying for student loans

Summer is coming to a close and for college students, that means it’s time to head back to school (or start school for you freshmen out there.) Everyone knows college is expensive, and the price only seems to be increasing every year. In fact, the average 2015 graduate with student-loan debt will have to pay upwards of $35,000 making them the most indebted class ever.

Student loans go hand and hand with your personal finances and credit report. One of the critical factors which is considered by financial institutions before they had out a loan to any borrower, is their credit report.  And having bad credit can reject any person’s application. This is one of the main reasons why many personal financial institutions have begun to offer a loan for veteran even if they have bad credit. When you or your kids apply for student loans, make sure they’re taking the right steps to applying for student loans to avoid crippling debt come post-graduation. If you have already graduated and are struggling with your student loans, check out our blog post: Game of Loans – A Guide to Defeating Student Loan Interest.

Step 1: Apply For Scholarships

Applying for Student Loans Scholarships

There are millions of scholarships out there just waiting to be awarded to students like you (assuming you are a student.)  There’s just about a scholarship for everything, whether you’re artistic, intelligent, athletic or speak Klingon (yes you read that right, there IS a scholarship based on the Star Trek language.)

Find out if you are eligible for a scholarship that’s right for you. Use this free search from Discover.

Step 2: Compare Financial Aid Offers

applying for student loans compare offers

I’m sure the financial aid offers will be rolling in. Make sure you read the fine print and compare all of the financial aid packages you may receive. It’s always good to have options, so choose the offer that you believe is the best fit for your situation.

Step 3: Plan a Budget

stepst to applying for student loans budget

Having a good budget in mind will help when determining how much you need to borrow. Always take into consideration the college cost, your cost of living, your contribution, financial aid & scholarships. Crunch the numbers and see how large of a loan you’ll need.

Step 4: Only Borrow What You Need

Just because Sallie Mae is offering you more than you expected doesn’t mean you have to accept it. Only borrow what you need based upon the budget you came up with in step 3. Doing so will mean less money to pay off after you graduate and also less money you’ll be paying in interest.

Step 5: Talk with Your Financial Aid Officer

applying for student loans talk to advisor

Your financial aid officer is there to help you. If you see something you don’t understand, ask questions and ask for their advice. If you think you may need to borrow more, you might want to look into Private Loans. Just so you know, if you are planning to take out private loans you will need a cosigner with good credit.

Step 6: Know your Loans Before you Sign

applying for student loans know your loans

You’re finally ready to sign for your student loans! Make sure your know everything about them before doing so. Read the fine print. Know specifics like: How much is the total amount of the loan? Can you get a lower interest rate? What will the monthly payments be? How long before you will have to start paying? Are any fees involved?

Ask your student loan officer if you have any questions and make sure you know your loan through and through before signing away.

Step 7: Get a Part-Time Job

applying for student loans part time job

Securing a part-time job while away at school can help you cover your living expenses, giving you more money to put towards the loan. You may even want to consider a work-study program at your college.

Step 8: Start Making Payments While in College

applying for student loans pay down accounts

Just because your payments don’t start until after you graduate, doesn’t mean you have to wait to pay. You’d be surprised how big of a chunk you can take out of your loans within the 4 years you are in school. You don’t have to pay a ton of money either. Pay what excess money you can afford, every bit counts!

 

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Do you need business credit?

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So you’re getting ready to show off some properties to your new clients. You map out where you’re going and pile into your trusty, but dated, automobile.

It’s about that time you realize the “old girl” isn’t what she used to be. Perhaps a new car would look a bit more professional, but you’re not ready for a new car loan. Maybe business credit is right for you.

What is a Good Credit Score?

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With 56% of Americans having poor or bad credit, good credit can be hard to come by… But what is a good credit score exactly? Different lenders may have different definitions of what a “good” credit score is. One lender may approve clients with a 640 credit score or higher while another might approve clients at 720. The higher your credit score is, the more likely you are to get approved and the better your rate will be.

Score Range

FICO score is the most commonly used credit scoring model. FICO scores ranges from 300-850 and can differ depending on what credit application you’re pulling for. If you are applying for a mortgage your score will be different than applying for a new car, and both of those scores will be different than a score applying for a credit card, and so on. Here is the considered scoring range for FICO scores:

FICO Scoring Model:

Credit score

  • Excellent Credit: 781-850
  • Good Credit: 661-780
  • Fair Credit: 601-60
  • Poor Credit: 501-600
  • Bad Credit: Below 500

Why it’s Important to Have a Good Credit Score

While you may be able to get approved from some lenders with a 640, you’ll be missing out on premium rates which can mean you’ll be paying more money in the long run. Someone with a 780 may wind up paying close to $100,000 less on a mortgage compared to someone in the mid 600s. Good credit will also allow you to get better credit cards with lower interest rates as well. It’s no joke, people with bad credit will always wind up paying more. Read our blog on how bad credit will control your life for a better understanding of this.

What is your Credit Score?

Don’t just assume you have good credit. If you plan on applying for a loan in the not too distant future, you may want to figure out where your scores are at right now. Find out your scores and make sure there are no errors reporting on them. Fill out the form below and Better Qualified will give you a free credit consultation with a credit analyst.


What Makes Up Your Credit Score?

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Why do we have credit scores? What makes up your credit score? Did you know 56% of Americans have bad credit?

Credit scores were implemented to determine the creditworthiness of a borrower. The higher the credit score, the more likely the consumer will pay his or her bills on time. While the most important piece of your credit score can be paying on time, there are several other factors that play a role in determining your score as well.

Payment History 35%

When it comes to determining your credit score, the biggest piece of the puzzle is your payment history. What this means is you have to stay current on your accounts and pay on time. If your forgetting to make payments, set reminders for yourself or enroll in autopay. Just 1 missed payment can drop your credit score 100 points or more and take a long time to recover.

If you’re having trouble making payments, consider contacting the lender or switching to 0% balance transfer cards. 0% balance transfer cards will transfer your balance and allow you to make payments with no interest for a set period of time. You’ll be surprised how quickly you can pay off accounts when interest isn’t accruing.

Amounts Owed 30%

Don’t max out! Maxing out your credit cards is not good for a number of reasons. Maxed out cards with ensure that you are paying the maximum amount of interest possible. When you get to this point, climbing out of debt can feel like climbing Mt Everest. Making minimum payments will only pay off the interest, leaving you in limbo. It’s also noteworthy to say that consumers with maxed out cards have an average credit score of 563.

On the flipside, not using your credit cards will also hurt your credit score. You want to use them, but not overuse them. Pay your accounts down to 20% of the credit limit or lower. Doing so will give you a quick boost in score. Always try to remain below 20% of your limit. Once you pass the 20% threshold your score will start to decline.

Another method to raise your credit score would be to ask the creditor for an increase in your credit line. Increasing your credit line will see the utilization ratio drop, bringing your closer to 20% or lower and increasing your credit score.

Length of Credit History 15%

I see it all the time, clients call in wondering why their credit score had dropped. They just got a new credit card and closed their old one. Not a good idea. Old credit cards are not like old appliances. The older your card, the more impact it has on your score. Closing old accounts will almost always bring your score down.

If your old card has outrageous annual fees or super high interest rates, then you may want to think about closing them up. Before you do, call your credit card company and ask if they can waive the fee or reduce your interest rate. If they refuse to budge, then you may want to make the moves to close your account.

Variety of Credit 10%

Consumers with the highest credit scores have them because they have a variety of credit. There are 2 types of credit: Installment loans set at a fixed rate which are your mortgages, auto loans and student loans to name a few, and revolving credit which are your credit cards.

It’s always a good idea to have a few different accounts open on your credit report, including a few different credit cards. Doing so will spread out your utilization and make it easier to maintain a good score.

New Credit 10%

New credit can happen any time you apply for a new loan or account. When your credit score is pulled an inquiry is created. Inquiries will shave off a few points from your score and affect your credit for about 1 year (although they can report for 2 years.) Inquiries have strength in numbers and can really bring your score down if you’re constantly pulling your credit throughout the year. So make sure to keep a watchful eye on your inquiries.

If you are struggling with bad credit and would like a free consultation with an expect, please fill out the form below and we’ll be happy to point your credit in the right direction (up!)

Fill out the form for a free credit consultation


Closing Credit Cards: When Should You Do It

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Cutting Cards

You’ve gotten a new credit card and are looking to get rid of the old one that’s been with you since the dawn of time. Sure, you’ve had some good times together. After all if it wasn’t for your trusty credit card you wouldn’t have been able to pay for all those dates to impress your now wife or purchase that rug that really ties your living room together. So the question is… should you really be parting ways with your credit card just because it’s showing its age?

The answer is…. it depends. First ask yourself why? Why are you planning on closing your credit card? You should think twice before closing any old credit cards just “because they are old.” Positive revolving credit is a huge factor when building your credit score. If you’re looking to make the split with a card make sure you have good reason. If you are still using the card consider keeping it alive and well. Length of credit history makes up 15% of your FICO score. In this case, your old credit card might be your best source of positive credit.

When closing an old account your credit utilization ratio will remain at zero, making it hard to help your score out. If this credit karma study has taught us anything, it’s that your utilization should remain somewhere between 1%-20%.

Avg Credit Utilization Ratio (Source CreditKarma.com)
Avg Credit Utilization Ratio (Source CreditKarma.com)

Another factor for determining your score is the number of accounts. Getting a new credit card doesn’t mean you should close an old one. Having only one revolving tradeline opened at a time places all of your utilization on the single card. Try to keep a few cards active and remain below 20% of the credit limit.

If you are applying (or planning to apply) for a loan you should wait until after your application process to close any credit card accounts. The drop in score you get from closing an account may affect your ability to get approved, especially if you are just above qualifying range.

When Should I Close My Credit Cards?

Ideally you would want to close your credit cards when you are slammed with high interest rates, stuck with annual fees or trying to get out of debt. When an individual with bad credit is approved for a credit card, they are usually met with super-high interest rates. Maybe this was you a few years ago and now your credit is exceptional. Before swapping your card out for a new one, ask your credit card company if they can lower your interest rate. If not, then do away with them. Having good enough credit will get you approved for another card with better interest.

Annual fees are another pain. If your card has been collecting dust for months and you’re still paying the annual fee, consider closing it. There’s plenty of other cards out there that can collect dust with no annual fee (but in all seriousness, use your cards regularly as it will be beneficial to your score.)

According to NerdWallet, the average US household credit card debt stands at $15,706. That’s a pretty big amount of debt. One of the quickest ways to get out of debt is with the use of balance transfer cards. Balance transfer cards do exactly what their name entails. They allow you to transfer the balance from one credit card to another and make interest-free payments for a set time frame. You will be surprised how quickly you can pay off your debt when you aren’t paying the interest. If you feel trapped by your debt, check out our Get Out Of Credit Card Debt blog post Here.

What to Know Before Closing Credit Cards

You’ve made the decision, it’s time to let go and move on, but before you do make sure you prepare yourself for what’s coming!

Your Credit Will Be Effected

As stated above, after closing accounts your credit score will most likely drop. Consider closing the newer accounts before the older ones as older accounts hold more weight when determining your score. Once the account is closed your payment information will remain on your report for years to come. Positive payment info can remain for up to 10 years on your report (This is a good thing.) Whereas negative payment info can last up to 7 years.

Satisfy Your Balance/Redeem Rewards

Most (but not all) credit card companies won’t close accounts until your balance is at zero. Find what your credit card company allows. It’s always better to pay the account off first before closing. If you don’t think you can pay the account off, consider 0% balance transfer cards as previously mentioned.

If your credit card gives out rewards, make sure you redeem them before you close the account. If the account is closed before redeeming your rewards, you’ll most likely miss out on everything you’ve “earned.”

Closing Your Account

You’ve read the risks, you’ve satisfied the balance and you’ve redeemed your rewards. The time has come to put your card to rest (R.I.P.)

RIP Steve's Card

Contact your credit card company and break the news to them. Some companies will let you cancel online while others will require you to talk over the phone to a representative. Visit your credit card company’s website and/or give them a call to let them know you wish to close your account. Double check with the representative to ensure there’s no residual interest about to hit your account that you may need to pay. Too many times have I seen a situation where someone thinks they closed their account only to have it remain open and go derogatory.

Get Verification! This should go without saying. After you confirm your account as closed ask the representative to send you a verification email. Be patient, sometimes it can take a month for the account to close. Once you get verification of the closed account, check your report. Check your report on your credit monitoring service or go to a free credit report site like credit karma or credit sesame. Get in contact with the credit card company if your credit report is still reporting the account as open. If you don’t have credit monitoring, take advantage of our 3 months free offer here.

Need Help with Your Credit?

Afraid your credit might not be where it needs to? Can’t read your credit report? We know credit is confusing. That’s why we give out free credit consultations. We’ll take a look at your report and point you in the right direction. Fill out the form below and find out what you can do to better your credit score.


The Steps to Good Credit – Credit’s Do’s and Don’ts

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Excellent Credit score BQ blog

The Dos and Don’ts to Good Credit

Your credit score is the most important number in your life. It can determine whether or not you will be owning a new home, driving the car of your dreams, or even securing that new job you just had an interview for.

Having a good credit score can lead you to a long enjoyable lifestyle…. But having a bad score can feel like you’re trapped inside a terrible nightmare.

If it’s one thing I’ve learned working in this business, it’s that credit is confusing and always changing. Back in March, the Credit Reporting Agencies made an announcement regarding new ways to report medical debt and disputed accounts. This change will benefit most Americans, especially those plagued by medical debt.

In an industry that’s consistently changing, how can a consumer know how to obtain a positive credit score? The general public is uneducated when it comes to credit and most are even unaware of their own scores. Well, you’re in luck! I’m here to give you the basic steps to good credit:

DO: Secure different trade lines of credit.

The first rule for the steps to good credit is to secure different trade lines. The more types of credit you have, the better your score will be (assuming the accounts are in good standing.) Ten percent of your credit score is determined by the different types of credit used. That doesn’t mean go out and start applying for as many accounts as you can (that will hurt you.) What that means is the credit bureaus like to see variety. A consumer with a mortgage, a few credit cards, student loan, and auto loan on his/her report should have pretty good credit score (again, assuming all accounts are in a good standing.)

DON’T: Close Out Old Credit Cards

“I’ve had this card for years. It’s old, and I just got a new one should I close this out?” The answer is NO! Old credit cards aren’t like old TVs or computers. You shouldn’t close them just because they are old. In fact fifteen percent of your credit score is based upon credit history. Closing old accounts can instantly decrease your credit score. If you have an old account you no longer use, you’re better off waiting for them to become inactive rather than closing them out.

What Determines your credit score? (Source myfico.com)
What Determines your credit score? (Source myfico.com)

DO: Use Credit Cards Regularly

Not long ago I met a gentleman who told me he only opens up credit cards to boost his credit score. He never uses them, just opens them up and locks them away.

While this may improve the score a little, his score can be substantially increased if he actually used the cards. A recent study from Credit Karma shows an average score of 692 for consumers that hold their cards at a zero balance. The same study shows average scores of 753 for consumers who used 1-10% of their credit limit, and 715 for those who used 11-20%. Which brings me to our next “don’t”…

DON’T: Go Over 20% of the Credit Limit

The bureaus want to see you using your cards, but they don’t want to see you overusing them. This is also a good strategy for your wallet, as the more in debt you go, the more interest you will pay.

It’s easy to start charging away on your credit card and not realize where your utilization lies. Stay on top of your balance. Make sure you budget yourself and keep track of where your account is at. In the same Credit Karma study mentioned above, the average credit score is 563 for consumers with maxed out cards.

Avg Credit Utilization Ratio (Source CreditKarma.com)
Avg Credit Utilization Ratio (Source CreditKarma.com)

DO: Pay More Towards Accounts

Any type of loan will have you make monthly payments. Do your best to pay more than the minimum. While making minimum payments won’t necessarily hurt your credit score, you’ll get a score boost if you pay them off in a timely manner.

Making minimum payments will cause you to pay more interest, which is money you could be saving. If the minimum payment is all you can afford at the moment, then there’s not much else you can do. When you do come into some extra cash, put it towards your debt. The quicker your debt is paid off, the quicker you’ll have some extra dough.

DONT: MAKE LATE PAYMENTS!

The most important Don’t on the list! Making a late payment with drop your credit tremendously and will remain on your report for up to 7 years. All derogatory accounts start with just one late payment so make sure you pay everything on time.

In today’s fast paced world it’s easy to forget when payments are due. It’s always a good idea to setup payments through autopay. Just double check to ensure the payments go through. If you’re not doing autopay, set reminders for yourself to pay. One late payment is all it takes to destroy your credit score.

DO: Monitor Your Credit

Always keep a watchful eye on your credit. Credit monitoring can alert you to any new accounts that will appear on your report. If you see something fraudulent, report it to the bureaus and the FTC immediately. It’s easier to get a recent mistake removed rather than a lingering old mistake.

DONT: Assume Your Credit is Fine

1 in 4 consumers have errors on their credit reports. Most consumers aren’t even aware of what is on their report. Get a credit report and find out what is on it. If you need help reading the report, consult a credit expert like the ones at Better Qualified. They can tell you exactly what is on the report and provide you with the steps toward better credit. They also specialize in removing negative items from credit reports. Don’t just assume your credit is doing great. Make sure you know what is being reported!

If you follow the steps to good credit, your score will increase tremendously. If you need help getting your credit back on track, just ask! We’ll provide you with a free credit analysis, go over your report with you, and determine what actions need to be made to improve your credit. Just fill out the form below:

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5 Reasons To Consider Business Credit

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Consider Biz credit

If you own a small business you may want to consider building your business credit. Owning a business is a struggle in itself. How can any new business expect to grow with limited resources and finances? That’s where business credit comes in.

Business credit can help take your business further by providing the financial means your business needs. Here are just a few reasons to consider business credit:

1. Separate Business & Personal Finances

Crossing your business finances with your personal finances can be a real headache. Throw in bookkeeping and tax information and now you’ve got a recipe for stress. Personal finances should not be a part of your business finances and vice versa. Business credit makes it easy to separate the two. With business credit, all of your business expenses will be under your business credit tradelines and not on your personal Visa Card.

If your business is incorporated, it is imperative to avoid mixing personal finance with business finance. If you fail to do so, your legal protection by act of incorporation is voided. This means if your business is ever sued, you will be sued as well. This can and will be devastating to your credit, especially if you don’t have the funds to handle the lawsuit.

2. No Business Tradelines on Personal Credit Report

If you don’t have business credit, chances are most of your business expenses are charged on your personal credit cards. Most new business owners rely on their personal credit to kick start their business. This usually results in a huge drop in personal credit score and a serious amount of debt.

Lenders will use your DTI ratio (Debt to Income) to determine how much you can responsibly borrow. This means your mortgage, car payment, and other personal debt may hinder you from getting the loan your business needs. By using business credit you can obtain a loan with a clean slate.

As the first reason states, separation is key! What if there was a way to keep your business credit on your business credit report and off of your personal? Well, there is. The first thing you would need to do is establish business credit. Once your business credit is established you may begin to open new tradelines using only your business credit, taking your personal credit out of the picture. This removes you from any personal guarantee (no social security number) and puts the account only under your company’s name (Tax ID number.)

3. Financial Cushion

Eight out of ten new businesses fail within the first 18 months. That’s 80%! You can search for the reasons why small businesses fail and you’ll find the same answers. One of the most common is the lack of funds.

Success doesn’t happen overnight and sometimes it takes time to establish your brand. You can have a great service or product but if the money runs out it’s time to close up! Established business credit can supply your business with the loans and tradelines it needs to grow. Giving your business more time to flourish.

4. Tax Benefits

Certain business tradelines and most business credit cards will allow you to write off any interest you pay towards the account. While it is ideal to pay off your balance every month, it is good to know that the interest is tax deductible.

5. Sign-Up Rewards

With established business credit your company can obtain business credit cards. Most business credit cards will offer bonuses and rewards upon opening a new account. These rewards can be redeemed for travel and cashback. Use the rewards to obtain more resources for your business so you can grow.

Free Business Credit Consultation

Interested in Business Credit, but don’t know where to start or what steps to take? Fill out the form below and we’ll have one of our Business credit analysts give you a call.