Top 5 tips to manage your credit score
Building and maintaining a good credit score can save you thousands of dollars over the course of your adult life! Whether your applying for car loans, home loans, credit cards or entering a business venture, banks will also be quicker to lend a lower interest rate loan to an individual with a higher score! These tips will end up saving you thousands of dollars over your lifetime!
Monitor your credit score!
Visit www.annualcreditreport.com and be careful to type it exactly correct to make sure you get to the right website that have reports available from Experian, Equifax and TransUnion.
Dispute any errors right away!
This service is consumer driven and the companies have 30 days to manage a dispute claimed filed on your behalf due to a miss reporting in your credit history. Always pay your payments on time, early if you can, and avoid opening unnecessary accounts.
Make a schedule to check your free reports!
You get one free report from each company once a year! Break it up so you can monitor your score 3 times a year! Try something like this: April – TransUnion, in August – Equifax, and in December – Experian.
Biggest impacts on your credit score
Payment history: 35% - It’s always best to pay off credit cards in full each month, the only thing that happens when you carry a balance is you give money to the credit lender!
Amounts owed: 30% - Try to keep your utilization below 50% always, around 30% or less is optimal!
Length of history: 15% - Open a credit card when you turn 18 and start building credit early so by the time you are looking to make big life purchases (cars, homes, etc) you have an extensive credit history to work in your favor! Leave unused accounts open – it will help decrease your utilization and you don’t have to use it. Only open accounts as you need them, there are so many options depending on if you prioritize travel, cash back, or hotel rewards.
New Credit: 10% - Whenever you open a new account or look into a purchase (test driving a car) your credit can take a dip when you make purchase because you are increasing your risk, but on time payments will allow it to rise again. If you decide not to purchase, your score will return to the value it was before the inquiry.
Diversity of Credit: 10% - Car loans, home loans, school loans and credit cards all count toward diversifying your credit profile that shows responsibility across many platforms.
Find a Certified Financial Planner
Always use a Certified Financial Planner (CPA) because they must obtain a license and adhere to professional standards in accounting and this certification can be revoked if standards are not upheld.
Have your chosen CPA sign a Fiduciary Oath always! This oath legally binds the CPA to put your interests above their own in managing your finances. Using this path requires full disclosure of any conflicts of interest and maintenance of professional judgement to the benefit of the client.
Federal Trade Commission - Consumer Credit Information