credit score after bankruptcy

5 Steps to Improve Your Credit Score Easily

Rachel — Thu, 14 Jul 2016 07:29:06 +0000

5 Steps to Improve Your Credit Score Easily Rachel Thu, 07/14/2016 - 03:29

Take steps to improve your credit score
Image Source: Flickr CC User Ozzy Delaney

For many people, figuring out how to raise their credit score is a mystery. That’s because they don’t understand what factors into the score, how it’s calculated and how to manipulate those factors in their favor. In fact, once you understand how scores work, you can take proactive and simple steps toward improving your credit score. Here is a look at five steps you can take to raise your score through a tested and proven process.

#1 Get Credit

This seems counterintuitive. The reason you want a higher credit score may be so that you can get credit like a car loan or mortgage. However, you have to start somewhere to build up. If your credit score is middling to low, you’ll likely need to start with a secured credit card. If your score is average or a bit higher, you can start with an unsecured card.

Store cards can be a middle ground between secured and unsecured cards because they can be easier to obtain than unsecured credit cards but better than a secured card. However, interest rates are usually higher for store cards – and also for any card, secured or unsecured, that you get while your credit score is low. However, that doesn’t matter if you use the line properly.

#2 Use, but Keep Utilization Low

Utilization is important when factoring your credit score – it's the amount of credit that you actually use. However, utilization is calculated at the time your statement closes. For instance, if you have a $300 credit line and when your statement is issued, you have a $200 balance, that’s a 67% utilization, which is high and can wreck your credit score even though your card isn’t maxed.

Ideally, you should pay off your balance before your statement cuts. You can monitor your balance online and make a payment before the monthly closing date, and the statement will issue with a zero balance. That means no interest charges and a higher credit score. You don’t want to simply NOT use your cards, though, because then the creditor won’t bump your credit limits, which is important as well.

#3 Don’t Swipe if You Can’t Pay Cash

Using your credit card so that the creditor sees you’re active is the best way to get regular credit line bumps. The higher your credit line, the better your credit score will be. However, you also don’t want to carry balances. This should be your benchmark: if you can’t afford to pay cash for something, don't buy it with plastic.

Using your card for gas or groceries is often a smart solution. Since it’s money you have to spend anyway, use your card for it, then turn around and pay it off in full. You can pay on your credit cards multiple times during the month using online bill pay or through the card issuer’s website. Never, ever pay late – that causes stiff late fees and penalties. And never, ever go over your limit – that tanks your score, maximizes interest, and triggers more fees.

#4 Don’t Accumulate Debt

Credit card debt can be a slippery slope, particularly if you’re coming out of a bankruptcy. Many North Carolina consumers who have filed bankruptcy before are gun-shy when it comes to credit. They often want to avoid it altogether because they’re scared to get in over their head again. This is understandable but is not the path to improving your credit score.

You don’t want to rack up credit card debt, but you have to use your cards to keep your credit limits climbing and your credit score improving. Use your cards, but be cautious how you do it. Paying bills with your cards can be one way to ensure you’ve got utilization without racking up debt. Most utility services will allow you to pay bills with plastic, which you can in turn pay off online ASAP.

#5 Get Better Cards and Monitor Your Score Constantly

You should be monitoring your credit score constantly – there are a number of free and low-cost monitoring services you can sign up for to keep track of your score. Watch for errors, illicit activity, and improvement in your score. As your score climbs, you should apply for new cards with better terms. Why? One of the aspects of your credit score is new credit accounts.

In a nutshell, you can have lots of credit accounts, all in good standing but your score can fall if you don’t occasionally apply for and get new lines of credit. As your score increases, apply occasionally for new cards but also keep your old lines of credit open. Closing older cards can drop your credit score because the age of your average credit accounts also counts in your score.

Getting and keeping a better credit score isn’t something you can allow to happen on its own organically – it’s something you have to work at, particularly after you file bankruptcy. To get help with improving your credit score after bankruptcy, contact Credit Score Keys today.

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How Is Your Credit Score Calculated? Here Are the Details

Rachel — Thu, 07 Jul 2016 07:30:54 +0000

How Is Your Credit Score Calculated? Here Are the Details Rachel Thu, 07/07/2016 - 03:30

How is your credit score calculated
Image Source: Flickr CC User amboo who?

Even though your life shouldn’t revolve around money, the fact is, finances are important and your credit score matters. Most people know they should strive for good credit, but when it comes to how this score is calculated, and how to improve it, many North Carolina consumers don’t understand the nitty gritty details that drive the calculation.

What Is a FICO Score?

FICO is an acronym for the company that invented the most-used credit score calculation – Fair Isaac & Company. FICO scores are used by all three credit reporting agencies – TransUnion, Experian and Equifax – although each uses a slightly different calculation. FICO scores and credit reports are NOT the same thing.
Think about it this way: Your credit report is a roster of your activities. It shows your loans, credit cards, collection accounts and other activity related to debt and creditors. It’s simply a list of your open and closed accounts over the past seven to 10 years, plus activity on those accounts, balances owed, the type of debt you're taking on, and whether you’re current on your obligations or not.
From that information, a FICO or credit score can be calculated. Different aspects of your report are evaluated by the three reporting agencies to come up with your score. Scores range from roughly 300 to 850 depending on the credit agency and score methodology they used.
A score below 500 is considered a “bad” credit score. Scores under 600 are considered “poor.” Fair scores are 601 to 660, 661-780 is “good” and 780 and up is “excellent.”

How Is the Score Calculated?

Five elements play into the math of the credit score calculation. Payment history, amounts owed, length of credit history, types of credit accounts, and recently opened credit accounts are all factored in. Payment history is the most important component, making up 35% of your calculation.
Balances owed makes up 30% and, as such, are the second most weighted component. Length of credit history makes up 15% of your credit calculation. Types of credit accounts and new credit accounts each make up 10% of the score calculation. What this means is that your payment history is the most important aspect of your credit score calculation.
If nothing else, always paying your bills on time, particularly those that report to credit agencies, is the first step toward protecting and improving your credit score. Your score is important even if you’re not planning on applying for new credit since it determines many other things in life.
For instance, your credit score may determine whether or not you must put down a deposit to get utility services, how much you pay for variable rate services, and whether you can be denied for “non-essential services” such as cable and Internet. Credit score also factors into acceptance and rates for car insurance and certain leasing agreements.

The bottom line is that, like it or not, your credit score matters. If you recently filed North Carolina bankruptcy and are looking for ways to improve and rebuild your credit score, contact Credit Score Keys now for a free consultation on cleaning up and improving your FICO score after bankruptcy.

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credit score after bankruptcy

7 Habits That Can Improve Your Credit Score Fast After Bankruptcy

Rachel — Thu, 23 Jun 2016 03:32:11 +0000

7 Habits That Can Improve Your Credit Score Fast After Bankruptcy Rachel Wed, 06/22/2016 - 23:32

Habits to improve your score after bankruptcy. Image Source: Flickr CC User Julie Rybarczyk

Improving your credit score is never more important than after you get a bankruptcy discharge. Just as healthy dietary and physical habits can keep your body in good shape, healthy financial habits can improve your credit score and allow you to make the most of your financial fresh start.

Here are seven habits to help your credit score after bankruptcy…

#1 Apply for Credit Cards Wisely

Not applying for new credit can hurt your credit score, which won’t improve without activity. But applying for too much credit at once can tank your score since credit inquiries (i.e. a credit check) will temporarily lower it. These inquiries lose impact with time and gradually fall off your report, but you should still only apply for cards you’ve researched and have a good chance of receiving.

#2 Stagger out New Accounts

The average age of your credit accounts is important. Opening too many new accounts can drastically lower your age of credit, which will lower your score – even though you now have more available credit from more creditors. To avoid this, do your homework, research card qualifications and then apply for new credit at spaced-out intervals.

#3 Don’t Cancel Old Credit Cards

Because the age of your credit is so critical, closing older cards is also unwise. Post-bankruptcy, you’ll likely have to start rebuilding your credit with a secured credit card. You may be tempted to close this after a couple of years since you'll likely have “real” credit cards and because you want to get back the deposit you had to put down to get the secured card. But closing this account can hurt your credit score. Instead, leave it open – you can always close it later when your credit has more fully rebounded.

#4 Keep Balances at Low or Zero

Your credit utilization is important, but you never want to carry a balance if you don’t have to. Instead, consider using your credit cards for monthly recurring bills like Netflix. You can also use cards for groceries and other necessities, then turn around and pay off the card balance immediately. You don’t even have to wait for the statement to cut – just pay online.

#5 Pay off Collection Accounts

If you’re coming out of bankruptcy, you hopefully don’t have any accounts left in collections. But if you do, or if you ever end up with an account in collections, paying it off is wise. Some credit score calculations don’t count collection accounts with a zero balance against you. This can be a way to bump your score instantly and get one more thing off your debt roster.

#6 Pay Often and Early

When it comes to your bills, never pay anything late. It can be a slippery slope. With online bill pay options, there’s no excuse not to pay on time. Set up a schedule and remember to allow even electronic payments a few days to process. Stay on top of your bills, and if you can, set up a budget and stick to it. Late payments cause late fees and other negative consequences.

#7 Monitor Your Credit Score and Report

In order to keep improving, you need to know where your credit currently is. You also need to ensure that your efforts are paying off with a higher score. In addition, it's good to keep an eye out for errors, identity theft, and other issues that can crop up on your report. Enroll in a low-cost service that allows you to monitor all three of your credit reports, and check them on a monthly basis.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys today. Call today and be sure you make the most of the fresh start that bankruptcy offers.

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