Credit Score Tips and Tactics
Credit score is a tricky thing.
On one hand, it’s simple.
Pay all your bills on time and keep low balances.
But if you miss payments, or you get yourself in to a hole, getting your credit score back up can be very difficult and seem like an impossible task.
It is quite unfair if you make all your remaining payments on time for years, and you’re penalized for a bad moment several years ago, for instance.
While you should consult a professional on how to improve your credit score, here are some quick tips to improve your score.
- First, make all your remaining payments on time. Make sure to pay at the very least the minimum payment.
But the key to improving your credit is keeping your utilization rate as low as you can without having it at 0%.
Each card will have its own utilization record. You want to try to maintain the following with each card, not just the overall credit utilization percentage.
Keep your balances below 10% if you can.
If you cannot then below 30%.
If you cannot do that then below 50%.
You do not want to keep your balances at $0 though. Counterintuitively, this signals to the credit bureaus you don’t use your cards like someone that carries a balance.
It sounds ridiculous and stupid, and it is stupid, but keep a low balance on there that is ideally below 10%.
The second thing to do is if you have any accounts that carry balances that are delinquent and it’s tough for you to get those to $0, you want to settle any accounts that are delinquent.
You want to try to get a pay for deletion letter if you settle, but the major companies like the big banks will not do this or delete that way, so you don’t even want to try. Just settle the account to the best of your ability.
Offer what you can afford, see if they will take it, and negotiate with them as best as you can to just clear that to a $0 balance right away. If there is a $0 balance already, make sure you get the $0 balance letter and submit that to the credit bureaus as proof that this is incorrect reporting of the wrong balance amount.
Next, you want the credit limits on your existing cards as high as possible because that will allow for a lower utilization rate if you can keep it low and are responsible for keeping it low. To increase your credit limit, your credit card companies will run your credit and if your credit is not good, then you have circular logic where you are trapped.
Every situation is different, but you might want to apply to some more cards and get approved for credit cards that you plan on keeping a low balance on. Just make sure you pay them on time.
Running your credit will ding your credit, but if you get approved for the card it is worth it. So you have to be strategic and careful which cards you apply for. You basically want to apply for cards that will be super high odds of an approval. Search cards that specifically approve borrowers with average to below average credit scores.
Once you have done basically everything you can on your end hire a repair company to try to delete items. They will send out disputes and letters. You can do this yourself. There are apps and services where you can dispute things quickly to the bureaus or you can mail letters to the 3 bureaus.
You can also reach out to the creditors directly and discuss something with them if you have an issue. Download an actual credit report. At the bottom of the report, you will find the phone numbers and addresses of the actual companies that are reporting.
Improving your credit score will help with a number of factors with getting approved for a mortgage, car, investment properties. lines of credit, and all of these will come with a better interest rate.
The best way to get out of debt is don’t go into debt, because it is very difficult to climb out. You will be paying high interest for years and your credit score will keep you down from opportunities. It will cost you much more than just paying the interest rate. Do whatever you can to make your minimum payments on time moving forward.
Consult a legal professional and tax professional for legal questions and tax related questions surrounding your credit score.
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