Managing Your Credit Scores

 

Credit reporting is just data. That is why there are many mistakes on credit file. Many mistakes can affect your score. Here are some tips to manage your credit.

 

How are scores calculated:

 

35% - Payment history

15% - Length of credit

10% - New credit

10% - Types of credit

3% - How much owed

 

  • Have a mix of credit types – installment, mortgage, retail and major credit card ( minimum of 4)

  • Do not have too many retail cards like Target, Home Depot, Macy's, Kohl's, etc... Have more major cards like VISA, MasterCard, American Express, or Discover.

  • Do not close zero balance cards that are 10 years or older.

  • Keep balances at 3% or lower then your total available credit.

  • Carrying balances and only paying minimum is a negative. Try this: if you have minimum payment of $100 on a card. The minute you get your bill pay $40, 10 days later pay another $40, then when bill is due pay $25. Do this instead of waiting till it is due this can up your score by a few points.

  • Keep accounts active. It is better to charge something every 4-6 months instead of having a card with no history.

  • Once opened keep a card keep at least 2 years, If you open an account at a store to get a discount on purchases do not close right away.

  • Do not do many inquires it can hurt you scores.

  • Make sure your name and address is correct

  • If you have a P.O. Box it affects your score negatively.

  • When applying for credit and you are self employed Do not use titles such as “self employed”, “president” , “CEO” - instead use “executive manager”, “senior manager” etc.. Titles can negatively affect your score.

Get your free credit report annually at : https://www.annualcreditreport.com/index.action

 

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To Dispute:

  • Fix names with errors and remove old addresses. You can do this online with 3 major agencies. You need to supply them with ID ( enlarged), social security card, proof of address (PGE etc..)

  • Errors or disputes should always be in writing - send letter on baby blue paper. Hand-write it, provide ID, SS# and proof of address – Get it certified , follow up in 40 days.

  • If you have old collection more then 2 years old just settle. The older the collection the more discount you can ask. Always ask for a offer letter first.