CREDIT RESTORATION TIPS!

Ways You're Ruining Your Credit Score You know your credit score is important, but are you clued in on what you might inadvertently be doing to sabotage it? This three digit number acts like a grade for your financial life and is calculated based on the information in your credit reports, like your history of paying credit card bills and taking out loans. Lenders use it to determine your eligibility for mortgages, car loans and credit cards, plus how high of an interest rate you’ll pay. Your reports can even be pulled by prospective landlords or employers as they evaluate you for an apartment or job. A FICO score, which is used by the vast majority of lenders, ranges from 300 to 850. Anything above 780 is considered very good and anything below 600 is considered fair to bad. Here are some of the top credit score killers: 1. Paying bills late: Your history of making payments is one of the most important factors that goes into your credit score, whether it’s for a credit card, student loan or mortgage. It’s the first thing a lender wants to know, says Fair Isaac Co., which produces the FICO score, and composes about a third of your score. By slipping up and failing to pay your bills on time, your score gets dinged. It’s devastating for your credit score when you start missing payments entirely (say, you lost your job and can’t afford your mortgage) and they get sent to collections. A collection listed on your credit report will typically remain there for seven years, regardless of whether you pay it off later or not. (That’s right, an unpaid collection is no worse for your score than a paid collection.) With that said, generally the older a collection is the less it will hurt your score. If you get to the point where you’re forced into foreclosure or bankruptcy, that’s particularly catastrophic and can easily knock 100 points off your score. It doesn’t matter if you never exceed the limit and you’re religious about paying your bill in full every month. The fact remains: Amassing big balances on your credit card, relative to your allowance, is harmful to your score. With that said, there are a few tricks you can employ to spend as normal and take full advantage of credit card rewards, without putting your credit score in harms way. The balance that’s reported is typically the one on your monthly statement, so figure out when this hits your mailbox and pay well in advance. Call your credit card company to check. You can also try to boost your credit limit, either by requesting a higher limit on your existing card or signing up for another credit card. Your total credit limit rises with each additional credit line you’re extended. Just “don’t play chicken” with your bill, Your best bet might be to make credit card payments multiple times a month to ensure your balance is always low. Or if you make a big purchase, say a $1,500 flat-screen TV, go home and pay it off right away. You’re expected to pay your credit card bill every month, even if you’re challenging an item on your statement. Were you charged for a catering job you thought was subpar or hotel parking you thought was free? Shipped a defective product? By all means, fight for a refund with the merchant and call up your credit card company to tell them you’re disputing the charge (they’re supposed to designate that charge as pending.) But then pay your credit card bill.