MONEY MATTERS With Ken Barnes (IMPROVING YOUR CREDIT SCORE)
Posted by Saddat Adutwum | Posted in Features,
Ken Barnes, MBA, is the President of Barnes and Barnes Financial Inc and Ken Barnes Real Estate Group Inc. With Over 20 years of Management and leadership experience in
Banking, Marketing, Corporate Finance , Personal Financial Planning, Insurance, Real Estate and Management Consulting. He is member of the American Institute of Management Consultants and American
Management Association.
I would like to share with you some of the answers I have given over the years to the most frequently asked questions my office receives from clients from the field of Personal Finance, Business Management and Real Estate. I believe those who have been bold enough to call my office to ask these questions represent only a portion of the many people who have similar nagging questions.
I will from time to time share more of these answers with you as I keep this column going!
Today, I would like to answer the question "How do I improve my Credit Score?" a question which is on the lips of many people especially in today's America where due to the economic meltdown the credit scores also called the FICO scores or credit rating, of many people have been thrown into limbo.
Our credit rating is an important and integral part of our very being and day to day existence here in the United States and elsewhere. It invisibly controls our spending habits, auto insurance payments and determines our mortgage payments.
It dictates the deposit needed for our home rentals, car loans and payments, utilities like Electricity and Gas, and in many instances determines whether we get a job or not.
Some Banks use our credit ratings to determine whether to open accounts for us or not while some employers use the credit rating to determine our character, emotional stability and habits in their employment decisions. Many proposed marriage and love relationships have been ended due to credit ratings. These days some educated ladies insist on credit check before entering into love relationships! Funny huh? Maybe but wise!!!!
To put it in a better perspective I always advice my clients to use the term Risk Ratings instead of Credit Score or credit ratings in that way they know the enormity of it and learn to be careful with it!
So here are some simple ways on how to improve this all important aspect of your life-your Risk Ratings
Pay your monthly bills on time!, manage to pay at least the minimum balance every month on time! This is very vital. It is unforgivable to ruin your credit because you could not afford to pay the $10 minimum payment on time. On time means Due date! Paying after the due date does not necessarily ruin your credit but you pay the penalty of late fees but paying 30days or in some cases 28 days after the due date ruins your ratings.
Pay up past due bills and stay current. This actions self repairs your credit. To continue neglecting an unpaid bill is a sure means to ruin your credit as the creditor will continue to report your delinquency to the credit bureaus.
Don't leave high balances on your credit cards especially those with high interest rate. Pay the credit card with the highest interest rate first while paying at least the minimum on the one with the least interest rate. This saves you money and at the same time builds your credit as high balances will always kill your credit rating.
To those with more than one credit card, spread yourself thin. Don't max out the balance on one while the other has no balance. Always try to maintain little balances across the board as that helps builds your credit faster. It is always good to spread out your debt!.
Stop closing credit card accounts you have had forever. Closing these accounts hurts your credit score because it lowers the amount of credit available to you. Instead, use them at least once a month on very small purchases and make sure you pay it off on time. Anytime you pay your monthly bills on time your creditors will report you to the credit bureaus favorably.
Don't open new accounts just because they came your way! If you don't need the new account don't open it and please avoid opening too many accounts in a short period of time! Over checking your credit within a short span affects you.
Do not be afraid to check your credit score minimum two times a year, Know exactly what is on your credit report and who is reporting it, if something doesn't sit right,(and many times things are reported wrongly) call to dispute it as soon as possible. Check for the spelling of your name, correctness of your address, work etc.
Please note that improving your credit score is not an overnight venture. It takes time. From about six months up to 18 months in some instances even more! It takes a lot of tact and sometimes documentation. Sometimes as easy as clicking the dispute button on line.
Be responsible pay your bills on time and as a friend said "use your head". Using your head is and has always been the key in Personal Finance. Good luck.
