10 Credit Tips You Need To Know

10 Credit Tips You Need To Know

Trying to increase your credit score but not knowing how or where to start? Here are 10 easy tips you can do to start raising your score now, as well as long-term ways to maintain your credit score.

Tip #1 – OptOutPrescreen

Tired of constantly getting electronic credit card offers that you’re not going to use? OptOutPrescreen is a free tool to opt out of those offers for two years. Besides stopping the flood, you opting out gets reported back to the credit bureaus (such as Experian, TransUnion, and Equifax). Not receiving those offers means you are less likely to open up new debt, therefore increasing your credit score 10-20 points.

Tip #2 – Decrease Your Utilization

On your revolving debt (any source of credit you can draw on while it’s open and you haven’t hit your limit), there’s two ways to decrease your utilization. You can either 1) pay down your debt or 2) ask your credit card provider to raise your credit limit. After choosing one of those, your long-term goal should be to keep your balance between 10-30% of the credit limit. You don’t want too much debt, but it’s equally important to not have too little on it.

Tip #3 – Credit Building Loans and Credit Building Credit Cards

A great way to increase your credit score is to get loans and credit cards meant exactly for that: building credit. Credit building loans and credit cards are a great to way give your credit stability. A frequent problem when building credit or building back credit after a drop is that you don’t have enough positive history. With these loans and credit cards, you pay the bank or institution money and borrow against yourself. This process reports to all of the credit bureaus, showing your history. Of course, you have to make sure that after you open up those new lines of credit, you are paying it on time and keeping your utilization low. We recommend going to a local bank or credit union first before trying any online lenders.

Tip #4 – Being an Authorized User

Adding an authorized user or getting added as an authorized user is a huge benefit if you’re trying to build up credit. Authorized users are typically knowledgeable people (oftentimes it’s just Mom or Dad) that has their credit together and a revolving, longstanding debt. If your mom has, say, a J.C. Penny credit card, you can ask to be added on as an authorized user. All it takes is a quick call to the lender and they’ll send a card in the mail to the actual owner of the initial credit card. After that, you don’t even need to use the card! Any your mom makes a purchase or pays the bill, you, the authorized user, get credit for it.

Tip #5 – Collections: Getting Proof

A collection amount on your credit means that the lender has sold the rights to an uncollected debt to a debt collector, however by the time you hear about it, it could’ve been passed through several people. You might not know where you got the collection amount from and there’s a chance you could not owe it. A common occurrence when collection amounts are transferred between entities is a lack of records being kept surrounding that collection amount and they might not know if they cannot prove that you owe the bill. Why does that matter? Legally, if they cannot prove that you owe the bill, you can demand that they remove the bill from your credit report, potentially saving you from a dip in your credit score!

Tip #6 – Collections: Know What You’re Paying

Let’s say tip #5 fell through and proof was provided that you owe the bill. It’s important to consider how long that bill has been on your credit report. Legally, any form of credit (including a collection) sits on your credit for 7 years. If you start paying something off in year 6, you are completely restarting that 7 year cycle, so make sure to double check that you won’t wake that sleeping bear and that it will be beneficial for you to pay off that collection.

Tip #7 – Being in the Know

If you know what’s on your credit, you can accurately plan for whatever comes next in your financial future. Make sure you are utilizing free credit reports, such as annualcreditreport.com, to see what is getting reported on, what’s active, what’s closed, and where your credit is at. You can also go directly to the credit bureaus like Experian, Equifax, and TransUnion and request your free report. You only get one a year, so the best way to utilize that is to request one from one source every couple of months, letting you keep track of your score and get a great idea of what’s going on with your credit.

Tip #8 – Settlements vs Pay-for-deletions

Back to collections! When you’re paying a collection off, it’s important to know the difference between settlements and a pay-for-deletion. A settlement is when, for example, you have a $1,000 collection bill and you decide to settle with the collection agency for $500. A pay-for-deletion on the other hand is when you could settle or pay it in full but there is an additional part of the agreement where they will delete this collection from your credit report forever. Like we mentioned earlier, most things will stay on your credit report for seven years, but a pay-for-deletion is a way to quickly get rid of something you want gone from your report. A pay-for-deletion is one of the best things you can do for your credit score.

Tip #9 – Medical Collections

Medical debt, whether it be a lot or a little, is a common feature on some people’s credit. As usual with collections, first thing you should do is verify that you owe the bill, so contact the collection agency to confirm the bill and get proof. Medical collections are typically much more likely to work with you than other programs. You also always have the option to dispute a bill. Disputing a bill goes a step further and notifies all of the credit agencies as well as the debtor that you don’t think you owe the bill and want further proof. Disputing also involves credit agencies notating that it is a medical bill, which does not count against you and your credit because you did not willingly take that bill out.

Tip #10 – Experian Boost

Experian Boost links your bank account to your Experian credit report to give you credit for things you already pay for. Get your rent, utilities, subscriptions, and more added on to your credit report. The boost this gives you is in positive history. Smaller purchases or things like rent and utilities that you’re paying every month can flood your credit report with positive history. You’re already paying for it, might as well get a credit boost for it!

Have any questions on how each tip can apply to you? Feel free to reach out to us at JR Mortgage Group at (316) 247-9639!

JR Mortgage Group Wichita Kansas

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