11/12/2019
How to Improve Your Credit Score!
Article written for Los Baños Today:
Hello Beautiful people! Thank you for submitting topics of interest . This week we’re talking about how to improve your credit score and how to keep it great! For this piece I interviewed my good friend Maria Medina, owner of The Credit Repair Group in Turlock. Her and her team have helped thousands of people since 2004, so she knows her stuff. She graciously agreed to let me pick her brain so we can bring you this valuable information.
So how do you improve your credit? The credit bureaus look at 5 main areas in order of importance:
1) Payment History
2) Amounts owed
3) Length of Credit History
4) New Credit
5) Types of Credit
We’ll go through each one and give you valuable insights that will help you make solid decisions that will lead to improving your credit score.
Payment History
Credit bureaus will track timeliness of payments so late payments will hurt you. However, now that you’re back on your feet and making timely payments, you’ll see your score improve over time. Something you’ll want to do is pull your credit report and see if there are any mistakes. According to Maria, its not uncommon to find mistakes and those mistakes can be removed, which will lead to giving your credit score a nice bump. By law, you’re allowed to pull your credit free of charge once a year (https://www.annualcreditreport.com) so get your copy and look for errors. Or, if you bank with Chase like I do, they have something called Credit Journey where I can check my score anytime I want.
Amounts Owed
Lower your balances to improve your credit score. Credit bureaus track something called utilization ratio. This means they look at the balance compared to the credit limit. In an ideal situation you want to stay at about 20% of total. So, if you have a credit card with a $10,000 credit limit, you’ll want the balance to be $2,000 or less. This applies to credit cards and lines of credit but not to car loans or mortgages.
Length of Credit History
You can’t go back in time and open accounts but there are other things that can be done. Get a credit card, use it, allow for the balance to go through one reporting cycle, and pay it off. This will lead to increase in credit score as it shows you’re using credit. Another way to increase your credit is for friends or family to add you as an authorized user to one of their low balance credit cards (remember the utilization ratio tip). You’ll get “credit” you aren’t using, it will get reported to the credit bureaus, and will create a history.
Attention 18 year olds and parents of 18 year olds!!! According to Maria, it’s a great idea to welcome your kids to adulthood by adding them as an authorized user to a low balance credit card. It will pretty quickly boost their credit score to about 750 (which is excellent), and in about 6 months, have them get their own credit card, which can boost their score into the 800 range! That’s a life hack worth knowing that I’ll personally be doing with my nearly 17 year old daughter.
New Credit
If you go on a credit binge and open a lot of credit cards, lines of credit, car loans, etc., that can hurt your credit even if your utilization ratio is at or under 20%. Not the end of the world, but don’t open lines of credit just to have them. Some credit card companies will close accounts that aren’t being used and Maria says when that closure is reported to the credit bureaus, it can ding your credit by 75-100 points.
Types of Credit
Credit cards, unsecured loans, secured loans, mortgages, car loans, student loans, etc. When we use credit it costs us money because we pay interest (or not if you get 0% introductory rate) but it also leads to increasing your credit score. If you have a car payment, a couple credit cards, low utilization ratio, and you’re current, you’ll see your credit score rise.
Can I Buy a House with a Low Credit Score?
I asked Maria (she’s also a lender – she owns for companies) how someone with a low credit score can buy a house and was surprised by her answer, but it’s good news for those with a low credit score. She’s qualified people for a mortgage with a score as low as 580. The downside is they’ll get a higher interest rate, but the good news is it won’t stop you from buying a house. She also added that most down payment assistance programs have a lower limit of about 660, meaning you need a credit score of 660 or higher to qualify for assistance. It’s great that a low score won’t ruin your chances at buying your dream home!
Do I Need to Hire a Credit Repair Company?
As you can see there is a lot you can do to improve your credit score without hiring a credit repair company! However, I did ask Maria what to watch out for when you’re looking to hire someone so that you don’t get ripped off or get into trouble. Maria stated you should immediately run if the company is guaranteeing results or intends to lie to the credit bureaus. For example, a common scheme used by unethical credit repair companies is to send letters to the credit bureaus claiming the debts don’t belong to the individual or that the individual was a victim of identity fraud. It’s critical that you ask how they’ll do their work to ensure they’re not lying, which can get you in hot water.
It’s been a pleasure friends! Please continue to submit questions and story ideas so we can continue to write about things that matter to you!
If you would like to get a hold of Maria, here’s her contact info:
Maria Medina, Credit Repair Specialist
The Credit Repair Group
2406 W. Monte Vista Ave, Ste. B
Turlock, CA 95382
(209) 622-8982
[email protected]
www.justlifefinancialservices.com
Article link:
http://www.losbanostoday.com/business/how-to-improve-your-credit-score-and-keep-it-there/ #.XcXcyKSIYlQ
