12/18/2020
Your credit lifecycle
How do I build a high credit rating?
Attaining and maintaining a high credit rating is simply a matter of balancing the factors that credit bureaus value. Here are some tips for maintaining a strong credit rating:
Pay on time. This is the single most important factor in your credit rating. Late payments, collection accounts, and charge-offs will reflect poorly on your scores.
Keep your credit ratio (”utilization”) low. Using up most or all of your available credit lines is risky behavior. It’s smart to leave some credit available across your accounts.
Pay more than the minimum due. While the size of your payments is not reflected on your credit bureau, paying more will help keep your balances lower improving your credit ratio.
Know your payment due dates and credit limits. This will help you pay on time and avoid going overlimit, both of which will have positive impacts on your score over time.
Hang on to accounts. The longer your credit history and the longer you’ve held individual accounts the better, so keep the accounts you’ve had open longest. Jumping from product to product and constantly opening new accounts will lower your scores.
Check your credit report annually. Be sure that the information on your report is accurate and that your credit rating hasn’t slipped due to unknown information.
Image, FICO credit score ranges. Ranges. Bad 300 to 499,Poor 500 to 579,Low 580 to 619,Average 620 to 679,Good 680 to 699,Excellent 700 to 800
What if I run into credit challenges?
It sounds easy to keep your credit rating high, but what if life throws you a curve ball? Here are some tips to get you back on track.
Contact your creditors directly. Most creditors will have programs available for customers who are experiencing temporary or long-term hardships and will be willing to work with you to make handling your obligations easier by lowering monthly payment amounts or reducing interest on the account. Keep in mind that many of the programs will require that the account be frozen temporarily or closed, so make sure you understand what’s being offered.
Get back to paying on time as soon as possible. The quicker you get back to paying on time, the better. While any delinquencies that have been reported the bureau will still reflect in your score, the further they are in the past, the less they will impact you.
Provide the credit bureaus with an explanation. If you went through a hardship that impacted your credit (for instance a period of high medical bills), ask the credit reporting agencies to include a consumer statement on your file. This will allow future lenders to take the information into consideration when reviewing your file. It won’t impact your credit score, but may help with some lenders.
Wait it out. Your credit will bounce back. As you move further in time from the negative information, it will become less of a factor in your credit rating. It takes patience and focusing on maintaining the positive behaviors that will help your credit recover.
What is an authorized user?
An authorized user is an additional user identified by the cardmember who has permission to use the account. They receive a card with their name, and they have all of the same charging privileges as the primary cardmember. The key difference is that the authorized user is not considered financially liable for paying the account balance, regardless of whether they made the specific charges. They will also have limited access to customer service. This is why it is important to consider the ramifications of adding someone as an authorized user to your account; you will be expected to pay for any charges your authorized user makes on the account. Authorized users will see an account reporting on their credit file, but it will show that they are an authorized user, and the account won’t contribute to their credit rating to the same degree as an account they are directly responsible for.
