If you are like most women, then chances are you are always looking for ways to improve your credit score. We are all on that journey to reach the 750+ credit score
Check your credit score with Credit Sesame for free!
I use to say that credit wasn’t important until you needed it. The key to credit is having it in order before you need it. Credit plays a major impact in how your family lives. It may not seem important, but it can be the difference between you getting a home or literally and figuratively being homeless.
In addition to the blog, I also run a FB group called Looking For Housing In GA with over 17k members. I see day in and day out, how a low score impacts members’ ability to find sustainable housing, obtain utilities, insurance, jobs, and much more.
Imperfect credit does not have to be the elephant in the room. However, the key to improving your credit is to take the necessary steps to build up the score. I will share some of the same info that I share with my buyers when we are getting prepared to purchase a home. Simply put, you have to get started. Do not stress yourself over your credit score.
Below is my Buyers Guide To Improving Your Score and Joining The 750+ Club
What Is A Credit Score?
Your credit score is a three-digit number that indicates how likely you are to repay debt. Banks and lenders use it as a benchmark to determine if they’ll approve you for a credit card or loan as well as to determine the interest rate they will charge you.
Often times you will hear the TERM FICO SCORE – The FICO Score is a proprietary model created by Fair Isaac Corporation (FICO), people tend to use it interchangeably with a credit score.
FICO scores are one brand of credit score. Your FICO score is based on the data in your credit reports. A FICO score is a three-digit number, typically on a 300-850 range, that tells lenders how likely a consumer is to repay borrowed money based on their credit history
There are three main credit bureaus, hence your score can vary from one credit bureau to the next. The main three are Equifax, Experian, and TransUnion. All three have their own specific formulas that they use to calculate your score. All three may have very different information on file as it pertains to you and your credit score and credit history.
Let’s Talk About Good Credit?
Good credit can and is subjective to the individual that needs the score. Good credit could be a 580 credit score needed for an apt ( they aren’t necessarily going to charge you more rent than the person that has a 750 score for the same 1 bedroom apt).
However, a 580 score may get you a 14% interest rate on a car, whereas the individual with a 720 score may get a 3% interest rate for the same car. In the overall picture, 700+ is considered to be good credit. The higher the better.
The general rule of thumb is to strive for a 700+. The higher the number, the better the score is.
You’ve Fallen And You Can’t Get Up
The steps it takes to improve your credit are far more tedious than what it took to lower your score. Think of it as climbing Stone Mountain Park (for those of you in GA) It takes hard work to get to the top. When you are going back down, you almost feel as you can sprint, but if you aren’t careful, you will stumble and fall. That is your credit score. One late payment and your score could drop 100 points.
You May Be Hurting Your Credit Score If:
- High Utilization Rate. Keep your balances at 30% below what you can borrow. If your credit card limit is $1000, do not spend over $700. The Lender Gods do not want to see maxed-out credit cards.
- Do not close cards that you have paid off. While it is good to pay off credit cards, it’s not always good to close them. This action may cause your score to drop.
- Delinquent payments- PAY YOUR BILLS ON TIME.
- Erroneous information on your report. It is YOUR job to know what is on your credit report. Make sure errors are corrected.
Can My Credit Score Impact Buying A Home?
YES!
This is the #1 reason why you should want to improve your score
- With the exception of the NACA program, all lenders utilize your actual credit score to determine if they will approve you for a home loan.
- Your credit score directly impacts your approval. Lenders have approval guidelines based on all three scores – They normally use the middle credit score, hence if you have a 750, 690 an 675. They will use the 690 score as part of the approval.
- The lower your score, the more likely your interest rate will be higher.
- A higher interest rate impacts the amount of the home loan. It can be the difference between obtaining your dream home or having to settle and or in some cases not purchasing at all.
- A lower score may also cause you to have to put down more money
The Road to Improving Your Score And The Negative Impact
Your credit score doesn’t just tie into loan approval for a new home or car. Your credit score could prevent you from obtaining your dream job. It is better to have good credit and not need it than to need it and not have it.
You and you alone control your credit. So let’s work on improving it. You never know when you are going to need it.
Employment– Yes there are many potential employers that use your credit score as a determining fact as to whether or not you get the dream job you want. Banks, the Gov’t, Security jobs, and several others will check your credit- with your permission to determine if a job offer will be made or in some cases, rescinded. I have seen several individuals lose out on jobs after an offer was made because they had poor credit.
Insurance (Car & Home) Most if not all, forms of insurance for your car & home are based in part on your credit score- Sounds crazy, but I don’t make the rules. Why pay more money if you don’t have to. The extra money you are wasting because of poor credit could be going into your Ellevest Investment Acct. Companies consider you a higher risk. We know it’s BS, but I don’t make the rules.
Renting A Home – As a licensed Real Estate Broker – I know firsthand the impact of what having a low score does to renters. It literally can be the difference between you having shelter and living out of your car.
Landlords have a right to consider your score when determining if you are a credit risk. Would you want to rent your home (your 100k asset ) to someone that does not pay their bills on time? Big Red Flag.
Credit scores speak volumes when it comes to renters. If a landlord does decide to rent to you, they may require several months of rental payments upfront and or an excessive rental deposit and security deposit. Don’t get denied housing over your credit score. Every single day there is a post in my group for someone asking if there are any landlords that will take shakey credit….
Credit cards – If you want to rent a car or go on vacation then you will need a credit card. Plain and simple, there is not a ton that we can do in life without needing a credit card at some point and time. You do not want to be caught in need and you don’t have one.
Loans (home, car, etc.) – Even if you apply for a payday loan, you are going to have your credit pulled. Loan approval is based on credit scores. No one wants to loan money to people that do not pay their bills. lenders are looking to see if you are a credit risk.
The interest rate you receive – The better your score, the better the interest rate you obtain. This all equates to money. I recently came across a young lady that had a 23% rate on car, she was paying almost $600 a month on a car that should not have cost more than $225 a month. She is, in essence, throwing away $400 a month because of poor credit choices.
Know What Your Score Is – Check Your Credit Score.
Honestly, I pull my credit from several different sources including Credit Sesame and MyFico. In essence, they ultimately do the same things. Most are user-friendly and it makes the process of checking your score, seamless. I love that they provide me with alerts whenever something changes on my credit report.
In addition, you are entitled to an annual free credit report from any of the three main credit bureaus (TransUnion, Equifax, and Experian)
Space out your request, so that you can get a free report, every 4 months.
What Are The Ingredients In Your Credit Score
There are five main components that make up your score.
Payment history amounts owed are important, but the other ingredients are critical as well. You can’t bake a cake and forget the eggs, so don’t forget your other credit score ingredients.
- 35% Payment History. Payments, payments, payments, and more payments. Your payments are the biggest chunk of your score. Have you missed any payments, are your payments always late. Do you have any collections? One missed payment could cause your score to drop 100 points.
- 30% Amounts Owed. Credit Utilization- Plain and simple, do not max out your credit card, keep your utilization rate below 30%.
- 15% Length of Credit History. How long have you had your accounts? It’s rather important to keep your oldest credit cards open, even if they are paid off. I’ve had my American Express Card for over 10 years.
- 10% Credit Mix. This is all about the types of credit you have. It’s good to have various types of credit accts. This does not mean you need to open up new credit just for the sake of having a mix of credit. Please be credit responsible. This includes various account types, credit cards, a mortgage, car loan, student loans, etc.)
- 10% New Credit. Keep credit inquiries at a minimum. Hard inquiries impact your credit score. How long has it been since you opened a new line of credit? Checking your own report does not impact your score, ie. using a company like Credit Sesame will not impact your credit.
Check your credit score with Credit Sesame for free!
Improving Your Credit Score
Let’s get to the nitty-gritty of why you are here. You want to improve your score.
Honestly, it’s not as daunting as it seems, but it won’t magically happen in 24 hours. It took more than 24 hours to get a less than desirable score, it will take more than 24 hours to get a 750+ score.
The Magical Ingredient that you have been missing: JUST GET STARTED
After reading all of the above, I’m sure you’re wondering how YOU can increase your credit score.
The Basic Steps To Improving Your Credit
- Pull your credit report so that you know without a doubt where you stand. You need to check your credit on a regular basis. Errors are hurting you.
- Pay your bills on time and pay slightly more each month. If y min payment is $30, then I always pay $40.
- Put your accts on auto-draft- I transfer money to a specific acct where all my credit card payments ect., are pulled from.
- Do not max out your credit cards. I repeat, do not max out your credit cards. Stay below 30% of your available credit. Ask to have a credit increase in order to help with your overall utilization rate.
- I highly suggest this one… pay your credit cards every two weeks. When possible, pay your balances in full.
- Do not close credit card accounts unless they are charging you outrageous annual fees. The length of your credit history impacts your overall score.
- Start with your credit union when shopping for loans, and apply for loans all within a relatively short period of time vs several months.
- You may need to apply for a secured credit card in order to begin building your score back up
- Apply for a self lender loan as well- it will help to build up your score if needed.
These lil tidbits will provide you with an opportunity to improve your score. The key is to simply get started.
Keep in mind that what may be on your credit report is, in fact, yours and as such, you may also need to buckle down and simply pay the debt off. Before you charge an item, ask yourself if you really need it, is it an emergency? Do not use your credit cards like they are debit cards. This advice gives you the opportunity to improve your credit score so you can begin to use it to your advantage. Like I always say, though, make sure you are wise when it comes to your loan and credit card habits as you don’t want to go into debt.
Make wise choices when it comes to credit.
Take advantage of the resources at 750 Credit Score
Disputing Credit Errors
The Fair Credit Reporting Act, 15 U.S.C. § 1681, is U.S. Federal Government legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. In a nutshell, credit reporting agencies must report accurate and verifiable information. When it comes to disputing errors, you can dispute errors on your own, or you may want to do a free consultation with Lexington Law. When in doubt, dispute is the mantra I subscribe to.
In Conclusion
Stop procrastinating and take control of your credit future by being proactive and obtaining a copy of your report. Your credit may not be as bad as you think.
Useful Credit Websites
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