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5 Ways to Improve Your Credit Score This Year

Rachel — Wed, 05 Jul 2017 07:05:57 +0000

5 Ways to Improve Your Credit Score This Year Rachel Wed, 07/05/2017 - 03:05

Good habits protect your credit score
Image Source: Flickr User Araí Moleri Riva-Zucchelli

After bankruptcy, one of the first things to do to take full advantage of the fresh start you have is to begin rebuilding your credit as soon as possible. Within just a few months of your bankruptcy discharge, it’s time to start working on your credit. For most people, that starts with a secured credit card, then an unsecured one, and moves on from there. From there, it’s a matter of slow and steady. Along the way, there are some things you need to know about getting and keeping your credit score as high as it can be. Here are five ways to improve your credit score.

#1 Keep Balances Low or At Zero

If you’ve ever been in over your head with debt, you know it’s a terrible feeling. Not only that, but it’s a slippery slope. Paying off your credit cards in full each month is the best way to keep your credit cards from getting out of control. But it’s more than that. Balances determine utilization.

A big part of your credit score is utilization, which is the amount you’re using on your credit lines. If you use too much of your available credit, your credit score will drop, and you might not be offered future credit line increases. Creditors want to see that you use credit responsibly and pay promptly.

#2 Never Pay Late or Less Than You Should

You might think paying a credit card bill late now and then is no big deal. You might think it’s not such a hazard if you pay just one car loan payment or one mortgage payment late. In fact, it’s that first late payment that hits your credit score hard and causes it to drop.

Subsequent late payments will continue to erode your score, but it’s the first missed payment that takes the biggest toll, in most cases. You should also never pay less than the minimum due on a credit card or less than the installment owed on your car loan or mortgage loans.

#3 Don’t Close Old Accounts

Another aspect of your credit score is your average age of credit. It is calculated by totaling the years that your credit card accounts have been open divided by the number of credit cards. Suppose you have one card that’s six years old, two that are two years, and one that’s one year old.

That’s a total of eleven years of credit divided by five cards for an average age of 2.2 years. If your oldest card is a secured card and you decide to close it in favor of your newer accounts, you would drop to an average age of 1.25. That’s not nearly as good, and your score will drop just from closing it.

#4 Don’t Apply for Credit Haphazardly

You should not apply for credit unless you’re pretty certain that you will be approved. Many credit monitoring services will alert you when your score has improved enough to qualify for specific offers. By doing some research, you can make sure you meet the criteria.

For instance, some card issuers won’t work with bankruptcy filers until a certain amount of time has passed. Others won’t approve you if you’ve opened too many accounts recently. Only apply for credit when you meet the known criteria and don’t apply needlessly or often.

#5 Be Consistent with Credit Behavior

One of the things that creditors look for is consistent behavior. Suddenly running up your credit cards is a red flag that there’s a problem. Suddenly paying only the minimums is another warning sign. Missing a payment is an issue as well that can make a creditor think something is wrong.

Other warning signs that could cause a creditor to lower your credit line or refuse an increase is using your card for a cash advance or using your credit cards at places like pawn shops, gambling establishments, or other outlets that are a warning sign of risky behavior.

Once you start rebuilding your credit after bankruptcy, it’s important to stay on the right track. Re-establishing credit is a slow and steady process that requires diligence and patience. To find out more about rebuilding your credit score after bankruptcy, contact Credit Score Keys.

Call 919-495-2365 today for a free consultation with the credit experts at Credit Score Keys.

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6 Tips to Improve Your Credit After Bankruptcy for a Better FICO Score in 2017

Rachel — Thu, 02 Feb 2017 08:41:58 +0000

6 Tips to Improve Your Credit After Bankruptcy for a Better FICO Score in 2017 Rachel Thu, 02/02/2017 - 03:41

Get a better credit score in 2017
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A healthy credit score is critical to be approved for loans, get affordable financing, and pay a lower cost for many types of insurance and utilities. A recent survey by the American Bankers Association says just 60% of consumers checked their credit report last year.

Many consumers don’t understand how credit scores are calculated or how to improve one. There is no overnight cure for a low credit score, but there are strategies to apply to improve it over time. Start now, and you can have a better score before you know it. Consider these tips.

#1 Start Secured
After bankruptcy, you won’t have any credit card accounts. That’s the first place to start. Most consumers must begin with a secured credit card after bankruptcy, but all secured cards are not the same.
Do your homework and choose one that doesn’t have high annual fees, a ridiculous set-up fee, and over-the-top interest. Also, research to see which secured card issuers will work with recent bankruptcy filers – not all will do so.

#2 Check Your Report
Many bankruptcy filers gave up on monitoring their credit score because they know it’s not good news. After your bankruptcy discharge, pull your credit report from all three bureaus – Experian, TransUnion, and Equifax.
Make sure all accounts listed in your bankruptcy petition reflect a zero balance from the discharge. Also, look for accounts that are fraudulent or inaccurate and get those cleaned up by contacting the bureau and filing a dispute.

#3 Track Your Credit Score
To confirm your credit score is improving, you must know your starting point. Your credit report is not your credit score - don’t confuse the two. Discover offers a true FICO score to everyone – not just Discover card holders.
To get your true FICO score, visit credit score card dot com and get a free account. You’ll get the same score most potential creditors use, and you’ll get a quick rundown of what factors are helping or hurting your score.

#4 Apply for New Credit Strategically
It’s important to get a credit card account ASAP after bankruptcy discharge because one factor in your credit score is the average age of credit. Older accounts help you so even when you get unsecured cards, keep your older accounts.
New accounts also help your score but don’t apply for credit without being sure you’ll be approved. Research online credit forums to find out specific criteria and make sure you apply strategically, so you don’t get denials.

#5 Pay Off Balances in Full
You never want to fall into a trap where you get in too deep with credit cards. Cards are essential to improve your credit score, but you shouldn’t carry balances month to month. If you do, you’ll be stuck paying interest.
Instead, use cards wisely, perhaps for utilities and other necessities. You can pay off regularly and in full and don’t buy things you don’t need. If you pay off before your statement date, you shouldn’t incur any interest.

#6 Get New Credit but Use It Sparingly
Another part of your score is utilization. Your utilization is calculated as the percentage of balances owed on revolving credit compared to your total available lines of credit. If you have $10,000 in credit lines, that’s the first part.
If you have $2,000 in balances, that’s 2000/10000 = 20% utilization. That's not terrible, but lower is better. When you get new credit, it helps your utilization but only if you don’t use it. Keep your balances at low or zero for best results.

Make the Most of Your Fresh Start
After you get a bankruptcy discharge, it’s time to work on improving your credit score. There is no time to waste. If you’re not sure where to start, contact Credit Score Keys for assistance. We help North Carolina consumers improve their credit scores after bankruptcy.

Resources: ABA Survey
Discover Score Card

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Improving Your Credit Score Should Be Your Top New Year’s Resolution for 2017

Rachel — Thu, 29 Dec 2016 08:38:57 +0000

Improving Your Credit Score Should Be Your Top New Year’s Resolution for 2017 Rachel Thu, 12/29/2016 - 03:38

Consider a New Year's financial resolution
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As you’re making plans for the New Year, your credit score is likely the last thing on your mind but according to experts, this should be your top resolution heading into 2017. Your credit score determines whether you can buy a car or home and how much interest you will pay on that purchase. Your credit score also determines what rates you will pay for auto insurance, certain utilities, and can affect the rates you pay for many other goods and services in your life. The higher your score, the better.

Here’s a look at seven ways to kick off 2017 with an improved credit score:

#1 Clean up your credit report
Mistakes on your credit report can cost you. If you filed bankruptcy, it’s essential you ensure all accounts included in the bankruptcy show as discharged with a zero balance. Sometimes not all accounts are properly reported after bankruptcy. You may also find other errors that should be corrected.

#2 Pay down debt
Credit utilization is an important part of your credit score. At the max, you should never exceed 30% usage of your credit lines at the end of any billing cycle. If you ran up your cards over the holidays, pay them down ASAP to protect your credit score from a post-holiday hit that can lower your FICO score.

#3 Get higher credit limits
Another way to lower your credit utilization is to get higher credit limits. Those with the highest credit scores have lots of available credit they’re not using. If you have been paying on time and are a good customer, call up and ask for a higher credit line. This can lower utilization and protect your score.

#4 Become an authorized user
If you’re starting to rebuild your credit after bankruptcy, one of the fastest ways to improve your score is to become an authorized user on someone else’s account. If you have a friend or family member that will add you to one of their accounts, that can boost your score as long as they have good credit.

#5 Get a secured card
If you are starting out or restarting with your credit, usually a secured credit card is the place to begin. Most secured cards require at least a $200 deposit to open the account. Research the best deals and approval criteria before you apply then only apply to card programs you know will accept you.

#6 Open new accounts
You don’t want to open one credit account after another because too many hard inquiries can drop your score or cause you to be declined for applying too often. Periodically opening new accounts boosts your credit score so long as you don’t abuse the new credit you’ve been given.

#7 Set a budget so you never pay late
For any account that reports to the credit bureaus, paying late can drop your score 50 point in a heartbeat. You should always pay on time to avoid late fees and the hit to your score. Set a budget and stick to it and plan to pay all your bills on time. This will help your credit score and peace of mind.

New Year’s Eve is the perfect time to make a financial resolution to stay on track in 2017. Money and finances are among the top pledges people make in the New Year. If you’re worried about your credit score, this is the time to devote yourself to improving it.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys for a free consultation.

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7 Habits of People With Good Credit Scores – Tips for a FICO Boost in the New Year

Rachel — Thu, 22 Dec 2016 08:06:43 +0000

7 Habits of People With Good Credit Scores – Tips for a FICO Boost in the New Year Rachel Thu, 12/22/2016 - 03:06

Tips for keeping a good credit score
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After bankruptcy, it’s important to rebuild your credit score, and after you boost it, you need to keep it high. If you’ve struggled with your finances in the past, you need to develop and maintain a system of healthy financial behavior. If you’re uncertain what habits you should build, modeling your actions on those with strong and consistent credit scores isn’t a bad way to go. Here are seven habits of people with good credit scores.

#1 Keep Credit Lines Open
Keeping credit lines open is important because one significant aspect of your credit score is the average age of credit. Your older credit accounts greatly impact this so closing older accounts is not a good idea. If your older cards have higher interest rates, just don’t use them often or pay off in full before any interest accrues. Savvy consumers with higher scores don’t cut up their credit cards.

#2 Use Your Credit Cards Regularly but Responsibly
Using your credit cards regularly encourages your card issuers to raise your limits. Why is that important? See more in #3 below about credit limits. Setting up small recurring payments can keep your card active and keep your creditor offering increased limits. Using your credit card to pay your utility bills, Netflix, and other necessities is a solid habit so long as you turn around and pay off the card.

#3 Build Credit Lines and Don’t Use Them
Another aspect of your credit score is how much of your available credit is being utilized. A rule of thumb is that you should never exceed 30% of your available credit, but that’s a maximum. You should try to keep your balances very low at less than 5%. Smart people with high credit scores have tons of available credit they do not use. Getting credit limit increases helps this part of your score.

#4 Pay Off Your Balances Every Month
Rather than paying interest to the card issuer or running the risk of getting in over your head with credit cards, a good habit is to pay your balances off in full each month. You can use your card for necessities you’d spend on anyway and then pay off before your statement cuts so you avoid interest charges. Clever consumers rarely (or never) charge for things they can’t afford to pay in cash.

#5 Communicate With Creditors
If you are late on a payment, the best thing to do is to immediately contact your card issuer and explain the situation and ask if they can give you a one-time pass. If you usually pay on time, you might get a break on a late payment. But a missed payment will hit your credit score hard. Every late payment takes a hit on your score. Talking to your creditors can open up opportunities to save your score.

#6 Open New Accounts and Don’t Close Old Ones
In addition to not closing old accounts so that your average age of credit stays high, you should periodically open new accounts. This also boosts your score. Because of this dynamic, you can wind up with many card accounts to keep your score high. Set up small recurring payments like Netflix or Hulu, then set up auto-pays to pay the cards in full. You’ll never be late and it will keep your score robust.

#7 Monitor Your Credit Score
One last habit of those with good credit scores is to always know what your score is and monitor it regularly in case there are any errors, or your identity is stolen and fake accounts are opened. You can’t assume your credit report will stay clean and correct just because it was the last time you looked at it. Sign up for a monitoring program so you get regular alerts when things change.

Rebuilding your credit score after bankruptcy is a process that takes time, but it’s the best way to get on the right financial track and stay there. To find out more about boosting your credit score after bankruptcy, contact Credit Score Keys for a free consultation and tips for North Carolina consumers.

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Can You Get a Car Loan With That Credit Score? Maybe.

Rachel — Thu, 15 Dec 2016 08:54:59 +0000

Can You Get a Car Loan With That Credit Score? Maybe. Rachel Thu, 12/15/2016 - 03:54

Will your credit score land you a car loan?
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If you’re coming out of bankruptcy, rebuilding your credit score is job one. It’s best to take the long view and work on it slow and steady over time. But what if you need to finance something now? If your car is on its last leg, you are probably hoping you can get a loan before you find yourself Ubering everywhere. What credit score do you need to get a car loan? Here’s what you need to know to get approved for the loan you need.

#1 Income is important too

Your credit score is the first thing a potential lender will check but that’s not the only parameter that’s important. An income verification is also necessary. Just because you have a credit score in the range to get a “yes” that doesn’t mean you’ll be approved. If your income isn’t high enough to afford the car payments, you’ll get a “no.” The lender will take into account not only your income but other debt that they see on your credit report to make this determination.
Bottom line: Don’t try to buy more car than you can afford.

#2 Not all credit scores are the same

When you think “credit score” you probably think there is one three-digit number associated with your finances, but there are three agencies that track and issue credit reports and then a variety of scores that can be calculated from these reports. Check your scores and if one agency has a higher score for you, look at lenders that use that report. You might be more likely to get a “yes” if you cherry pick where you apply based on a better report.
Bottom line: Do your homework before you apply for a loan.

#3 Scores that should get a “yes”

The average credit scores to get a car loan, according to Bankrate, are 655 for a used car and 714 for a new car. However, the higher your score, the lower your interest rate should be. You can get a car loan below 655, but when you drop this low, you’re a serious credit risk for a lender so they treat you as high-risk. See more on subprime loans below. Different lenders have varying criteria and it pays to research lenders before you start car shopping.
Bottom line: Waiting until your score is higher to borrow is better.

#4 The dangers of subprime borrowing

For credit scores above 700, you should be able to borrow at around 4% (or better) for a new car and 5% (or better) for used. But below 660, rates are close to double that and if you are considered subprime (which means below the ideal), you can pay interest rates that are close to credit card level. That’s a bad deal that can come back to haunt you. If your car payments are so high that you struggle to pay them, you can wreck the fresh start you’ve made with your credit score.
Bottom line: Just because you get approved doesn’t mean you should take the loan.

#5 Weigh your alternatives

When you go into a dealership looking at cars, they will try to steer you to what is best for them, not you. They might even tell you to pick out a car and they’ll make the financing work. That’s the opposite way to go about things. Get pre-approved for a loan you can afford then shop based on that limit. Don’t make a loan fit the car, make the car you choose fit the loan that’s best for you. Also, try to borrow less than the maximum amount you’re approved for to give yourself wiggle room.
Bottom line: Do what’s best for you and don’t fall for car salesman tricks.

Come to Credit Score Keys for help!

If you’re coming out of bankruptcy and ready to make the most of your financial fresh start, contact Credit Score Keys. We’ll help you increase your credit score and get on the right track for your financial future. Call 919-495-2365 now for a free consultation.

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5 Ways to Protect Your Credit Score This Christmas: Tips for North Carolina Consumers

Rachel — Thu, 08 Dec 2016 08:08:28 +0000

5 Ways to Protect Your Credit Score This Christmas: Tips for North Carolina Consumers Rachel Thu, 12/08/2016 - 03:08

Don't wreck your credit this Christmas!
Image Source: StockSnap.io user Ben White.

If you are rebuilding your credit after bankruptcy, don’t let Christmas shopping throw you off track! Today, we’ll take a look at some common traps that can mess up your credit score this holiday season and how to avoid them so your FICO score doesn’t start the New Year at an all-time low.

#1 Think Hard Before Opening New Accounts

Christmas is the prime time for card offers, particularly those from retail stores. These stores push hard in advertising, store signage, and at the register for discounts if you take a store card today. They also may offer zero interest if the card is paid off by a certain date or other premiums to entice you into taking high-interest financing. You might be tempted to take the deal rather than spend cash, but it can cost you a lot in the long-run because opening too many new accounts tanks your FICO score.

#2 Don’t Take a Payday Loan or Cash Advance

Although payday loans are not allowed in North Carolina, there are still online lenders that offer money to NC consumers and predatory lenders right across the state line. Using horribly high-interest cash for Christmas is not the way to go. It may give you a happy holiday with lots of presents to open, but then you’ll have lots of money owed, interest racking up, and you could still be paying off this Christmas when next Christmas rolls around.

#3 Charge Carefully, and Don’t Max Out Your Cards

You should never end the month owing more than 30% of your loan balance on a card. Using your cards regularly and then paying off in full is the best way to stay in your creditor's good graces. Maxing out your cards will lower your credit score, make it harder to pay down your balances, incur high-interest charges, and wreck your efforts to rebuild your credit score after bankruptcy.

#4 Don’t Miss Payments Because You’re Overextended

It can be easy to get caught up in the spirit of giving and overdo it. This goes for food, drink, and money. But when you overspend on Christmas—even if you’re using cash, not credit—it can mess up your budget and your credit score. If you don’t have the money to make a credit card, car loan, or other financing payment, then you will see a hit to your credit score. Even one missed payment can knock your credit score for a loop.

#5 Watch For Scams When You Shop

North Carolina consumers should also be on the lookout for scams that could wreck their finances and their credit score. Many emails and web links offer tempting holiday bargains, but they can take you to scam sites that steal your money, credit card info, or install malware on your computer to steal your private information. All these can cause credit score issues.

Improving your credit score is an ongoing activity that requires work. You should always keep an eye on your score by setting up alerts through a free or low-cost service. Also, be vigilant about where you share your credit card numbers online and stick to well-known secure sites—but even that is not a guarantee since major sites like Home Depot and Target have been hacked. Monitoring your score and card activity are the best ways to know if someone has access your info.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys today for a free consultation. Call 919-495-2365 today to speak to a legal professional about your credit score issues.

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How Your Credit Score Affects Your Mortgage Interest Rate

Rachel — Thu, 17 Nov 2016 08:26:14 +0000

How Your Credit Score Affects Your Mortgage Interest Rate Rachel Thu, 11/17/2016 - 03:26

How credit score affects your mortgage cost
Image Source: StockSnap.io user Drew Coffman.

After years of rock-bottom interest rates, mortgage rates are slowly climbing upward. For those who are planning to buy a home, it’s important to understand the importance of your credit score when it comes to affording a home. Many people worry simply about getting approved for a home loan, but the larger concern should be getting a reasonable interest rate—and your credit score is one of the primary factors driving the interest rates you’ll be offered.

New Study Shows Credit Score is Primary Determiner

A recent study by Realtor.com examined 170,000 mortgages written in a two-month period in Fall 2016, and the results are illuminating. They examined 30-year mortgages under a fixed rate loan and the credit scores of those who obtained the mortgages.Unsurprisingly, those with higher credit scores obtained mortgages with lower interest rates. In addition to credit score, the borrower’s income, other debt load, and the type of loan affected the rate offered.
The study also showed that raising your credit score by as little as 25 points can get you a much more favorable interest rate on your mortgage. For those with higher credit scores, the other determining factors played more heavily into the rates they were offered, including income, stability of income, type of loan, and how much other debt they were carrying. In short, the mortgage lender wants to see right away that you can afford the loan and that you’re not up to your neck in other debt.

How Much Can Your Interest Rate Change Based On Score?

The same study showed a median interest rate of 3.62% for those with credit scores from 725-850. A 25-point drop between 725-750 could see those borrowers paying as high as 4% compared to a high of just 3.88% for those in the next highest tier. Once you drop below 725, the numbers skew more. At 700-725, median scores are 3.75% and can stretch up to 4.12% depending on other factors.
Dropping down to a FICO score of 675-700 means your outer limit could be as high as 4.25%. When it gets down to 650-675, the rates scoot out to 4.38% and to 4.5% for those between 625-650 credit score. Below 625 and you’re not likely to be approved for a mortgage and, if you are, the terms might be very disadvantageous. Rather than taking the hit, why not work on your credit score first and postpone applying for a mortgage until you’re better prepared?

How Much Does This Really Cost You?

On a $250,000 home with 5% down ($12,500), the median rate for the highest tier of credit scores (3.62%) would give you an estimated monthly payment of $1,08.45. At the next tier, 3.88% interest bumps you to $1,117. One more drop down to the outer limit of 4.25% will take you up to $1,168. Drop to the 4.38% rate and you’re at $1,186.50. The 4.5% rate takes you to $1,203.38. This may not seem like that big of a deal, but the disparity can increase between payments if you can’t put 5% down and the principal is greater.
With the most affordable loan above (3.62%), you will pay$152k in interest. At the higher 4.5% rate from the lowest credit score calculated above, the interest jumps to $195k. The total of interest payments is $433k at the higher interest rate and $389k at the lower rate. That’s $44,000 that could have gone into your retirement account or other investment. You could put that $1,428 a year difference into your 401(k), and it could turn into almost $125k extra to see you through your golden years.

The bottom line is that a better interest rate driven by a higher credit score will save you money in the long-run on your mortgage, make it easier to manage your finances, and put more money away into retirement savings. If you’ve gone through a bankruptcy, you can still work to improve your credit score to get approved for a mortgage. To find out more, contact Credit Score Keys today for a free consultation about boosting your credit score after bankruptcy. Call 919-495-2365.

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7 Shocking Things That Won’t Affect Your FICO Credit Score

Rachel — Thu, 10 Nov 2016 08:48:47 +0000

7 Shocking Things That Won’t Affect Your FICO Credit Score Rachel Thu, 11/10/2016 - 03:48

Shocking things that don't touch your credit score.
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Some life events seem major to you, but, because the credit bureaus couldn’t care less about them, they won’t affect your credit score. Some of these surprising things are positive and some are negative in terms of your quality of life, financial status, and well-being, yet they don’t actually raise or lower your credit score. Take a look at these seven things you won't have to worry about affecting your credit score.

#1 Paying Your Bills On Time

We often mention that paying your bills on time is the first step towards re-establishing your credit. This is the foundation for financial responsibility, but a lot of the bills you pay won’t affect your FICO score whether you pay them on-time or late. Typically, utilities, rent, and medical bills can all be paid late without affecting your credit score. Paying them on time also won’t help your score.

#2 Earning A High Income

Earning a good wage makes it easier to pay your bills on time and keep your credit card balances low. However, simply earning a high salary won’t boost your score. In fact, some high earners have lower credit scores than middle or low-income earners because they overspend, carry too-large balances on their credit scores, or aren’t financially responsible despite their high wages.

#3 Criminal Activity, Arrest, Or Even Jail

This might surprise you, but being arrested for a crime won’t affect your credit—no matter the crime. Any criminal record is not reflected on your credit report and therefore not factored into your score. Even if you go to jail, your credit can remain in tip-top shape so long as your bills get paid while you’re in the pokey.

#4 Paying Or Filing Your Income Taxes Late

Income taxes can be troublesome for people who have their withholdings set too low or who might be self-employed and don’t set aside enough income to pay their quarterly or annual taxes. However, filing your incomes taxes late, paying late, or filing taxes when you’re unable to pay the amount due won’t immediately impact your credit score. If it goes into collections or a lien, that’s another matter.

#5 Checking Your Own Credit

Most people know that when they apply for a loan, credit card, or other financing, the potential lender or creditor runs a credit check. This is called an inquiry or a “hard pull.” These reflect on your credit report, and having too many hard pulls can drop your credit score for a while. Eventually, these inquiries lose their impact on your score and drop off your report. But checking your own score doesn’t hurt.

#6 Where You Get Your Income

If you lose your job or have financial strife and wind up on unemployment or taking some form of public assistance, that won’t affect your credit score so long as you pay the bills that report to the three credit bureaus. For those that rely on alimony and child support to get by rather than income from a job, that doesn’t matter either. Pay your debts, don’t overextend, and you’ll be fine.

#7 Getting Married Or Divorced

These are major life events that don’t impact your credit. Even if you marry someone with very good or very bad credit, your score won’t rise or fall. Marriage only impacts you if you finance something together. Divorce itself won’t impact your score, but it could mess with your ability to service debt. Marriage or divorce seem like big deals to you but will not directly affect your credit score.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys for a free consultation at our Raleigh, North Carolina offices. Call 919-495-2365 now for more information.

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9 Step Plan to Building a Better Credit Score After Bankruptcy

Rachel — Thu, 27 Oct 2016 07:30:22 +0000

9 Step Plan to Building a Better Credit Score After Bankruptcy Rachel Thu, 10/27/2016 - 03:30

After bankruptcy, you need to develop a plan.
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When you’re ready to improve your credit score after bankruptcy, choose the best path to help you rebuild and improve your financial future. It takes time to get a better score, and the longer you take to get started, the longer until you see results. Check out this nine-step plan to get started improving your credit score today.

#1 Check Your Credit Report

Mistakes on your credit report can cost you points and result in a lower credit score. It’s particularly important after bankruptcy to check your report and make sure that all the accounts in your bankruptcy are reflected with a zero balance. Just getting errors fixed can provide a 20-point boost.

#2 Target Weak Areas

As you come out of bankruptcy, your weak areas will probably be obvious. However, if you have a mortgage or car loan that survived the bankruptcy, get a budget going ASAP so that you pay on time every month. From there, you need a plan to re-establish your credit and improve your credit score.

#3 Pay On Time

This is critical for bills and creditors that report to the credit bureaus, but you should try to never pay any bills late or short of what you owe. Bankruptcy is your shot at a financial reset, so you need to make the best of it by establishing or reinforcing good financial habits.

#4 Start ASAP Because Age Matters

One of the factors in your credit score is your average age of credit. The longer the better, so you need to get started soon after your bankruptcy discharge so that you start that clock ticking. As soon as you get your discharge, pull your credit reports, clean up any errors, and then start rebuilding credit.

#5 Get A Secured Credit Card

A secured card is usually the first card you can get after bankruptcy, so save money for this while you're waiting on your bankruptcy discharge. Keep in mind that you’ll need a cash deposit to open a secured card. You can be turned down for secured cards if you don’t meet criteria, so research each card before you apply.

#6 Don’t Apply Randomly

As you rebuild credit, it should be done strategically. Start with secured cards before moving onto unsecured cards, and only apply for credit you're pretty sure you can get. This means doing your homework to figure out what cards make sense for your situation. Don’t respond to random offers in the mail.

#7 Use But Don’t Abuse

Using your credit cards (secured or unsecured) responsibly can help score credit line increases that improve the utilization factor of your credit score. Using cards and then paying them off in full each month can is useful, but you should never spend mindlessly. Using your cards for fuel or groceries is practical, but avoid frivolous purchases as much as possible.

#8 Understand Your Credit Score

Some actions you think might help your score could actually hurt it. Understand that your score is a combination of your payment history (on-time is a must), credit utilization (how much of your credit lines you’re using), average age of credit (older accounts help a lot), mix of credit, and inquiries (you don’t want a big stack of these showing).

#9 Make The Most Of Your Financial Fresh Start

Most bankruptcy filers only file bankruptcy once in their lifetime because this fresh start is enough to get and keep them on track. By following a plan of intentional action to improve your credit score after bankruptcy, you’ll make the most of the financial reset offered by North Carolina bankruptcy.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys today. We can help.

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5 Easy Fixes to Improve Your Credit Score

Rachel — Thu, 20 Oct 2016 07:33:01 +0000

5 Easy Fixes to Improve Your Credit Score Rachel Thu, 10/20/2016 - 03:33

Fix your credit after bankruptcy.
Image Source: Flickr User velacreations

After bankruptcy, your main job should be improving your credit score. Your credit score affects many aspects of your life, such as how much you pay for car insurance, whether you can rent an apartment, how much utilities cost, and whether you’ll have to pay a deposit to get utility services. Here is a look at five simple ways to improve your credit score.

#1 Correct Any Errors

A Federal Reserve Bank study found that roughly 20% of consumers have errors on their credit reports. After bankruptcy, it’s common for accounts included in the bankruptcy to not reflect properly. They should show a zero balance and that they were part of your bankruptcy petition and discharge.
If any accounts show a balance still owing, you can request a correction. The same Federal Reserve study showed that half of the consumers that got a correction saw a 20-point bump in their score, and more than 5% saw an even larger bump in their score from the correction.

#2 Decrease Utilization

If you’re already working on boosting your credit score after bankruptcy and have one or more credit cards or other revolving lines of credit like a store card, then utilization is critical. If you have a credit card with a $500 line of credit and a $100 balance, that’s 20% utilization.
To please your card issuer and get ongoing credit line increases, you need to use your cards. But you can use and pay off in full each month so your utilization remains at close to 0%, which is better for your credit score. Use does not have to equal utilization! Don’t charge if you can’t pay off in full each month.

#3 Keep Accounts Open

When you first start rebuilding your credit, you typically have to start with secured credit cards and then move on to mediocre unsecured credit card offers, and then, finally, you can get a good, unsecured credit card. Once you get a “good” credit card, you might decide to shred your old secured credit card to celebrate.
Closing a secured card account could hurt your credit score in two ways. First, it lowers your total available credit lines, which negatively affects your utilization calculation (the percent of credit you’re using). Second, it lowers your average age of credit. Keep old accounts open and use them just occasionally.

#4 Pay Your Bills On Time (and in Full)

You may prioritize one bill over another if your money is tight. If you have to, first pay bills that report to the credit agencies, such as your credit cards and auto loan. But bear in mind that even bills that don’t normally report to the credit agencies could impact your credit score.
For example, if you don’t pay your cable bill and your account is closed with a balance due, then this could result in a collections account. That account can then be reflected on your credit which, in turn, will drop your overall score. Paying off the account with a negotiation that includes removing the collection account from your report can help.

#5 Occasionally Open New Accounts

In addition to keeping older accounts open, occasionally opening new accounts will boost your score. If you add a new credit card every six months or so, it can boost your score so long as you don’t run up balances. The highest credit scores come with lots of available credit that is NOT used.
Once you hit a good credit score, opening a new account every year or so can help keep your score healthy. Get the cards, use them only occasionally, and pay off in full to keep your credit score at an optimal level.

Rebuilding credit after bankruptcy can be tricky, but following these five steps will give you a running start on getting a better credit score and achieving the solid financial future you deserve.

If you’re confused about how to rebuild your credit score after bankruptcy, Credit Score Keys can help.

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