Your credit is one of the most important numbers in your life. Alongside your Social Security Number, your credit score is the most important number you’ll use. One proves your identity and one proves your ability to repay your debts, unless your credit score is poor. If you live with a poor credit score, it’s the biggest sign you must work on repairing your credit. Many consumers aren’t aware their credit requires work. Perhaps they assume their never-missed or late payments are an indication of a great credit score. Maybe they think they don’t have debt, so their credit is fine. Perhaps you think your score is good enough. There are some signs you should work on repairing your credit, no matter the number listed on your credit report.
You’re Receiving Debt Collection Calls
There are scam artists working day and night to take money from innocent people, and there are debt collectors calling on legitimate debts. If you’re someone who hasn’t defaulted on a debt, you might assume you’re being conned when debt collectors call. You could be, or you could be someone whose identity has been stolen. You could also be the victim of a simple mistake on your credit report thanks to a careless creditor. If you’re receiving these calls, take a moment to check your credit reports and begin repairing any damage you find.
You’re Denied A Loan or Credit Card
Mistakes and identity theft happen all the time to unsuspecting consumers, which is why it’s imperative to keep on top of your credit report. However, what happens if your credit history is clean, but you’re denied a card or loan? It means your history might be fine, but your score isn’t. You could have too much debt compared to your income. It’s time to chip away at that debt so you can raise your score.
You Can’t Get Electricity
When the utility company denies you a chance to turn on your electricity when you move into a new home, it means it’s time to repair your credit. The fact that it’s not good enough to turn on the power for you indicates you have credit issues that require your immediate attention. You shouldn’t need to put down a deposit or ask someone else to turn it on for you.
You Aren’t Hired for A Job
It’s an unfair double-edged sword, but it’s reality. If you have a low credit score, you might be denied a job. You might need that job to pay off your debts and become financially stable, but you can’t land a job with your credit score. It happens all the time, and it’s a problem. If you’re not hired for a job because your credit score is holding you back, it’s time to repair the score.
Your Score is Below 720
In the past, scores below 700 weren’t considered horrible. Today, anything below 720 is considered a subprime score. You’ll find it impossible to get the best interest rates, to find the best deals, or even to become approved for credit cards, loans, or car notes. If your score is below 720, work on getting it up. It’s dangerously low, and it’s not going to help your financial future.
Improving Your Credit
These are five signs your credit needs improvement. Another is your fear of simply checking your credit score. If you’re afraid of what you might find, it’s a good indicator you’re in over your head. It’s easy to assume there’s nothing you can do at this point, but you’re incorrect. Whether there are mistakes on your report, someone else borrowed your identity, or you weren’t always good with your finances, you can change your score.
It’s not easy, and it’s not something you can do overnight. Repairing your credit takes months, and sometimes it takes years. To repair and improve your credit score, you’ll want to begin with the basics.
- Check your credit every three months
- Look for mistakes on your credit report and fix them
- Dispute incorrect or old debts past the 7 year mark
- Pay off collection accounts
- Pay down your debts
- Pay off your credit cards in full each month
- Keep balances less than 30% of your total available credit
- Don’t make late payments
- Don’t miss payments
They might seem like common sense, but consumers are often surprised what just six months without late payments on their account can do to improve their credit. You’ll also want to check to see how much of your credit is being utilized. The idea is to keep your balance below 30% of your total available credit.
Don’t Close Old Accounts
One of the biggest mistakes consumers make is closing old credit cards once they’re paid off. Don’t do this right away. Check your report to see if your credit utilization will be affected by this, and check to see how old your oldest account is. Credit scores use the length of your credit history to determine your score, and cancelling your oldest accounts has a negative effect on the length of your credit history. You want to keep it as long as possible, and you want to keep older cards.
Your credit score is in need of repair if you meet any of the above-mentioned scenarios, and you’re in control. Getting started now means you’re that much closer to better credit, fewer denials, and a brighter financial future.