Repair Your Credit Before it’s too Late
From financing a car to purchasing your first home, credit determines a lot of important life decisions. While the prospect of a number determining the trajectory of your life may terrify you, it doesn’t change the fact that it does. Because your credit score relies on a variety of factors, many people find them to be complicated and difficult to sustain. Luckily, there is an entire industry devoted to repairing credit scores. Begin with self-help tactics, but venture to a reputable credit repair merchant for additional help raising your score.
The Credit Score Basics
The basics of this 3-digit number that carries a lot of weight are as follows:
- Most credit models follow a 300-850 point range
- The fewer the points, the worse the credit score
- Generally, under 600 is bad (subprime)
Consider this, over ⅓ of credit holders have a subprime credit score while nearly 14% of people have no credit at all. One of the major differences in score amounts is tied to age. Younger people have a harder time attaining a good point score. This is in part due to the limited access to credit that this group has.
Since the CARD Act of 2009, it has become much harder for young adults under 21 to secure a credit card. This may be a double edged sword, but it has ensured limited access to hurting (or helping) their credit history so early on.
Does Your Number Help or Hurt?
Take a look at where you stand with your score by logging onto a reputable credit report card and seeing where you rank with the 3 major credit bureaus- Equifax, Experian, and TransUnion. If you have room for improvement, you will want to look into what is affecting your score negatively. This could be due to previous payment history, outstanding debts, number of open accounts, etc. Make sure to review your total report and dispute any errors.
If you feel that your point score is much lower than you expected and want to begin improving it immediately, try adjusting according to these factors
- Make Payments on Time – This is one of the easiest tasks to do, and yet simple to let slip up. After a few months of timely bill pay, you will begin seeing an improvement.
- Lower Your Credit Card Balances – Try to maintain a usage rate of under 30%. This means that you may have to pay down outstanding balances and keep them low.
- Diversify Your History – Having a range of debt types is better than just a handful of credit cards. For example, banks would rather see that you are paying on a car, your schooling, and a credit card more than just 3 credit cards. Not necessarily an easy fix, but something to keep in mind.
When Self-Help isn’t Enough
Sometimes making adjustments on your own just isn’t enough. If that is the case, you will need to reach out to an experienced credit repair merchant in order to delve deeper and improve your score. Whether you just need to raise it a few points in order to qualify for that apartment you’ve been looking at or you need a total rehaul, they are equipped to help.
What to Look Out For
If some credit repair companies seem too good to be true, they probably are. Never fall for the red flags in which they promise an improvement guarantee or where you must pay before the service begins. These are common tactics for fraudulent businesses to use. Also, be sure to read reviews of the business on the Better Business Bureau and Consumer Financial Protection Bureau. Keep in mind that repairing your credit isn’t a fix-all and it will take continuous monitoring and conscious decisions on your part to sustain good credit.