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Are you struggling financially to build credit and manage your finances? The average score in the United States is 698, which is based on the Vantage Score model. What is your credit score compared to the national average? After being in the financial world for over a decade, most customers are not aware of credit criteria, the credit scoring models, or how to build credit. Let’s discuss the latest tips and tricks to building credit and getting closer to financial freedom…
There are 3 different credit reporting agencies, which are Experian, Trasunion, and Equifax. If you attempt to check all 3, the reporting agencies will not match. Your credit scores are created using either FICO or VantageScore Solutions. Though both may look at similar criteria, how the information is weighed will differ, which creates different scores. Also, depending on the lender, they may look at different scoring models, which will fall into a range of 300-850. 300 being the lowest or poorest and 850 being excellent or the highest. The factors each model will look at will be payment history, credit utilization, amounts owed, length of credit history, recent accounts, and mix of credit obtained.
First, if you are looking to build credit, you should always pay on time to avoid delinquencies and remarks placed on your credit report. Usually, auto loans or mortgages will allow a grace period, however, credit cards or lines of credit may not. You want to be sure you are paying the item before it becomes 31 days or more late. Payment history is one of the top influential factors for credit scores.
Second, you should always review your credit report at least once per year to check for discrepancies and accurate remarks. This will keep you up to date with your credit report and privy to all current and post lenders. There are several programs available to monitor credit and provide credit reports, such as Credit Karma and Annual Credit Report. You can also obtain this information by reaching out directly to the credit reporting agencies by email, online, or by phone. If you do currently have a credit card or loan, your lender may be able to provide an annual report to you as well.
Third, if you review your credit report and find inaccuracies, know that you can dispute this information. As mentioned above, you can dispute directly through the credit reporting agencies or current program utilized for credit monitoring. If the lender information is inaccurate, your name, or unfamiliar address then you can dispute. The dispute will be investigated and if deemed false, the agencies will remove from your report automatically.
Fourth, you should always keep your usage below 30 percent to be looked at as favorable among lenders. As your credit usage increases, the amount of credit owed also increase, which drives down your score. Lenders favor individuals that manage their debt well and can afford to pay for it. This is a heavy factor amount both credit FICO and VantageScore Solutions.
Finally, a great tip to build credit is to ask for a credit limit increase. If you have been managing your credit card or line of credit well, you can ask your bank for an increase. If the bank approves, then this will increase the amount of credit available to you and lower the amount owed compared to usage. If you are currently working to build credit and wanting to apply for your first credit card. A secured card is always a great starter card for those with very poor to poor credit scores. My recommendation for a great secured credit card is the Capital One Platinum Secured. As a rebuilding credit card, it will help to transform your credit and increase your score. With a secured card based on your current credit score, a deposit of $50-$200 may be needed, but you are automatically considered for a credit increase within 6 months. Capital One also offers to check if you are pre-approved with no impact to your credit.
As you utilize the tips above, your credit score should increase to a favorable position within 2-3 months. Continue to be consistent and work hard on this road to financial freedom.
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Sending everyone love, light, and positivity!
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