Credit score: Face your fear

Credit score: Welcome back, my financial-savvy aspiring friends!

We’ve already covered what (and how important) personal credit is. Now, for how to fix it.

8 essential credit score tips

Tip one

(This part is less fun)

Know your personal credit score! If you don’t know it, you can get it free here. We’ll wait.

Great! Now that you know your score, it’s time to decipher it. Credit score numbers seem random to the uninitiated, so we’ll be using a comparison to post-secondary school for context.

Just like a poor credit score can wreak havoc with achieving life goals, so to can a grade point average severely limit post-secondary options for students.

If scores Were GPAs

720 & higher: Welcome to Harvard, ‘cause your personal credit score is Ivy League.

680 – 720: Almost Ivy League, and still very respectable. Like Stanford.

650 – 680: You’re easily accepted to Dalhousie, Acadia, & St.FX – but Stanford status is unlikely.

600 – 650: Limited choice in where to attend school. Saint Mary’s, NSCC, or private colleges, sans scholarship, are about it.

600 & below: No post-secondary until you rehabilitate your high school report card.

Essentially, the lower the personal credit score the higher the borrowing rates. Lenders use credit scores to determine how much and at what rates clients can borrow, and a lower score indicates to them a higher risk.

Tip two

Staring your personal credit score in the face was the hardest part; it’s all uphill from here.

Focus on performance factors: Making payments on time and credit use level account for 65 per cent of the scoring equation used to determine a credit score. If unable to change nothing else immediately, start with simply making payments on time and reducing card amounts.

Tip three

Reap sown credit: Don’t close those old accounts, even if you don’t use them (pro tip: store credit cards in a block of ice in your freezer if necessary). Canceling existing lines of credit damages your credit utilization ratio, a factor in determining credit scores. Having more available credit than debt is a huge plus for your credit score. Don’t blow it!

Tip four

Give limits a facelift: Increasing credit limits can improve your credit to debt ratio and thusly your credit score.

Caveats: Not recommended for the frequently financially tempted. Do not attempt to increase credit limits without speaking to an unbiased financial advisor or mortgage broker.

Tip five

Say ‘Boy, bye’ to bad debt: Pay off high-interest financing debts as soon as humanly possible. If you’re unsure how to pay off said debts, contact that unbiased mortgage broker we mentioned – they customize financial solutions every day & have resources you’re unaware of.

Tip six

Keep balances low: Using less than 35 per cent of your credit limit, per card or loan, is a good way to keep your credit score healthy as it is attractive to lenders. Prep for any future financial event (car, house, wedding) by paying down debt as far in advance as possible.

Tip seven

Deal with it now: Adopt ‘deal with it now’ as your financial mantra. Start applying it to how you handle accounts or debts that have fallen into collection. Many collection agencies will negotiate with clients to close the file for an agreed upon lower sum than owed. Most will work with you – capitalize on this!

Tip eight

Know thyself: Thy credit self, that is. When examining negative entries in your credit file, don’t assume immediate fault! Consumer watchdogs report that as many as 80 per cent of credit reports contain errors. A quarter of the time, those errors are enough to cause a FICO score drop of 50 points or more.

Clinton’s final word:

It’s never too late to start changing your financial future.

If you’re feeling more concerned than empowered after reading this post, we urge you to contact an unbiased mortgage broker or financial advisor to deal with it now.

Together, we got this.

Clinton

Have more questions? Feel free to contact us!