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More Ways to Boost Your Credit Score

MoneyWise

Christian talk radio with Rob West

July 12, 2022

Having a good credit score can help keep money in your pocket by getting lower interest rates. Today on MoneyWise, we’ll talk about ways you can boost your score. We should say right at the start that some of these things aren’t recommended, but we’ll mention them because it will help you understand how your credit score is determined. PAY OFF BALANCES The first way to boost your score is to have a strategy for paying off your balances. Ideally, you pay them off in full every month. But if you can’t do that, make sure you never use more than 30% of your available credit on any revolving account, like a credit card. Once you go over 30%, your score begins to fall. So if you’re over that figure on a card, take steps to get below it quickly. You want to make your payment before the issuer reports to the credit bureaus each month. You can google to find out when that is. For example, Discover reports to all three credit bureaus (Experian, Transunion, and Equifax) three days after your closing statement for the month. An easy way to make sure your payment is recorded is to make two or more payments throughout the month. Keeping your balance below 30% is the second most important factor making up your credit score, right after making your payments on time. And that’s the next way to boost your score PAY ON TIME Never make a late payment. If you pay late a single time, it can wipe out any gain you might make elsewhere. If you’re ever more than 30 days late, call the creditor immediately and explain your situation. Ask if they’ll delay reporting the late payment. They might, but there’s no guarantee. Then make the payment as soon as possible. DISPUTE ERRORS Here’s another one we’ve talked about: Dispute any errors on your credit report. Get all three reports for free at AnnualCreditReport. com. If you see an error you can dispute it at the appropriate credit bureau. If you have an account that’s gone to collections, your score has probably suffered significantly and will continue to be affected for seven years. So be encouraged that dealing with collectors properly can have a big impact on your score. Obviously, if an account has gone to collections, you need to pay it off as quickly as possible. Call the collection agency and give them a plan for paying it in full or making regular and faithful monthly payments. When you’ve paid off the account, ask the collection agency if they’ll stop reporting it to the credit bureaus. If they agree to do so, it will greatly improve your score. Of course, if the collection action is in error, you need to dispute it immediately at the three credit bureaus. WHAT IF YOU HAVE LITTLE OR NO CREDIT HISTORY? The next few ways to boost your credit score are aimed at folks who have little to no credit history. You can become an authorized user on someone else’s credit card. For example, a parent can sign up online with the issuer to make a child an authorized user on a card. The child then gets the benefit of the parent’s longer credit history and good payment record. But you can also get a secured credit card. You would put a deposit of, say, $500 on the card, and you can then use the card up to that limit. But don’t. Instead, make one small regular purchase each month and pay off the balance in full. Your credit score will improve month by month. You can also boost your credit score by making your rent and utility payments on time. Landlords and utilities don’t usually report to the credit bureaus, but you can subscribe with a rent reporting service to have it done. WHAT NOT TO DO Here are a couple of strategies that we DON’T recommend: First, you can raise your credit score by getting an increase in your available credit from your card issuer. That would improve your score because it lowers your credit utilization which makes up 30% of your score. A better way to achieve the same thing is to simply pay down your balances. You could also add different kinds of accounts. (Again, we don’t recommend going into debt for credit-building purposes. For example, if you finance a car, your score will increase. That’s because you have a greater credit mix, which makes up another 10% of your score. But it’s just not wise to take on debt to improve your score, so don’t. On today’s program, Rob also answers listener questions: ● Should you consider a work-from-home job selling insurance? ● How can a college student figure out the right living situation on a low budget? ● When is it wise to refinance your mortgage? RESOURCES MENTIONED: ● BankRate. com

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