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Quick Tips for Credit Health

Quick Tips to Credit Health:

Paying Bills on Time

  • This has the largest effect on ones credit.  Always make payments on time to all creditors including but not limited to student loans, car loans, utilities (yes... utilities), credit cards, mortgages, etc.  35% of your credit score is based on payment history.

Credit Limit versus Credit Balance

  • Keep your utilization rate down (how much you owe versus how much you have available).  Only use 30% of your available credit on your credit cards.
  • Ask your creditors when they report to the bureaus.  You might be paying your creditors prior to the due date, but they may have already reported showing a large balance over your credit limit which effects your utilization rate.    

Closing credit accounts is not always the best remedy

  • Closing your credit accounts is not always the best remedy to avoid using your credit cards- you might be eliminating your positive credit history.  15% of your credit score is based on your credit history.

Variety of Accounts

  • Have a mixture of revolving (eg: credit cards) and installment (eg: auto loan) accounts.  10% of your credit score is made up of the types of credit used.

Pulling your credit report

  • There are two types of credit pulls: soft and hard pull.   A soft pull is used many times for promotional reasons and/or for own personal use where it does not have an effect on your credit.  A hard pull is where a creditor has a "permissible purpose" to pull your credit and shows as an "inquiry" seen by other creditors.  Inquires has a 10%  effect on your credit.  Be selective of having your credit pulled often and only apply for new credit accounts as needed.

       Paying Collection accounts

  • Making a payment when an account is in collection will re-age the information.  Consult a professional before making a payment or negotiate payment for removal off credit report. Re-aging old information can have a huge negative impact on your score.

Rebuilding is key to raising your credit

  • Disputing inaccuracies is only one piece of the puzzle if you have had problems in the past.  Re-establishing new credit history is KEY. Opening new accounts responsibly and paying them on time will raise your FICO score.
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