Your credit is one of the most important aspects in your adult life. Which is really crazy when you think about how much influence an imaginary number has on you. Your credit determines what type of car you can get, where you’ll live, and the list goes on.
When my husband and I got married we were 18 and 19 years old and only had a vague idea about how it all worked. Basically we ruined ourselves by getting behind on payments or just simply not paying bills at all because at the time we didn’t have the money and definitely didn’t think it would cause problems in the future.
As we got older the reality of just how bad our credit was began to sink in when we had to pay outrageous amounts for deposits on utilities, we were never able to get a loan and if we were it wasn’t one with a reasonable interest rate, and it was difficult for us to find a house that we actually wanted to live in. We decided it was time for a change and took the first step in calling a credit restoration company. They gave us tons of great information and resources to start with and worked with us to reach our credit goals, so now I want to share some of the information I learned with you!
I want to stop right here for a minute and mention that I am in NO way a credit professional. These are simply a few things that we personally did to increase our credit score based on information that was given freely to us.
Sit down and figure out what is causing your credit to be low
Is it collections? Is it a high credit utilization issue? This is the first step to finding out what you need to do next. You can find this information for free on CreditKarma. The score isn’t always dead on and it doesn’t give you your score for all three credit bureaus, but it’s a good place to start because it does show your accounts accurately.
Once you figure out whats hurting you, make a plan to fix it
If it’s collections and the amounts are low enough, it’s usually easiest to just pay them off. Make sure they send you a “paid in full” letter either by mail or email and also confirm that it will be taken off of your credit report.
If the amounts are too high for you to be able to pay off or you don’t beleive you should have to for one reason or another you should consider calling a credit restoration company. We used Shapiro Hurst and they were amazing! We were always able to be in contact with someone if we had any questions (which of course I had a million) and they were always friendly and happy to help! They work by using the law against debt collectors. A lot of people don’t realize that it’s illegal for your information to be sold to a debt collector in a lot of cases. Especially when it comes to hospital debts. When you get started with them the hospital collections are usually always the first to go!
If it’s high credit utilization make yourself a budget and plan to pay more than just your minimum payments on your credit cards each month. Dave Ramsey’s snowball method is a great place to get started and it really works! (A good rule of thumb for credit utilization is to never use more than 30% of your total amount of available credit.) PRO TIP: 10% and under is considered excellent.
Balance is key
In order to get good credit you have to acquire some debt. Most people starting out will get a credit card, but it is VERY important that you don’t start applying for credit cards left and right. It will make you look risky and people don’t want to lend money to risky people. Also, keep the number of credit accounts you have at 4 or less. Too may credit accounts also looks risky and can even do you more harm than good.
Can’t get approved for a credit card? No worries! You can get a secured credit card to start off! This is a real credit card the only difference is you put a deposit down and that usually becomes your available credit. Deposits can be anywhere from $50-$200 depending on the card issuer and your credit worthiness. After a few months of good use you can get access to a higher credit amount and your deposit refunded!
Make your payments on time!
Late payments are among the most damaging things to your credit health and will drop your score like crazy! Make sure you always keep up to date with payments that are due, and if you can’t make the payment when it’s due contact your lender and see if you can get an extension (there is uaully a grace period as well). No one wants you to have a late payment and there’s always someone that’s willing to help you as much as they can!
Shopping credit cards aren’t the credit cards you want.
Sure, they’re convenient to have and come with some good benefits with the store it’s from, but they are also viewed as a frivolous credit and otherwise risky. So when looking for a credit card go with an actual credit card company and review their terms and conditions. Even as much as I LOVED my Victoria’s Secret Angel card I ended up canceling it after having multiple people tell me it just wasn’t good debt to have.
“Piggy back” on someone else’s credit
Yep! This is a thing where you can essentially borrow some of someone else’s credit! The easiest way to do it is to find a trusted family member and ask them to make you an authorized user on one of their credit cards. The longer they’ve had the card, the higher the credit limit, and no missed payments the better! This is one thing that can bring your credit up A LOT since lenders look at credit history, length, and payment history! When they make you an authorized they do not have to give you access to the account or even a credit card. They basically just put your name on the account.
Also once you get your credit up to a good number (700 and above) and you have a kid that’s 15 or older you can add them as authorized users on your accounts to build their credit for them! Now when they get ready to move out and go to college they can have a head start in life! Isn’t that what we all wished for starting out?
Utilizing these tips will help you improve your credit in no time and keep it in good standing! I did and we were able to buy our first home last year at age 23! I was also able to get a brand new car for the first time instead of having to buy used! I hope they help you, too!
Do you have any tips for credit health? Please, let me know!
You’re doin great, Mama!
These are not affiliated links. Just for a reference! God bless!