Understanding Credit

Do You Need Help Building Your Credit Rating?

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An individual’s credit rating is an important factor that significantly contributes to their financial well being. Whether an individual is applying for a loan or a new job, their credit rating will be evaluated and could be used for making a final decision. Given the major impact that a credit score has on a person’s ability to access credit and reasonable interest rates, no one can afford to ignore their credit rating. For these important reasons, building up a healthy credit rating should be a top priority for anyone with a low credit score.

Three types of people suffer from a lack of good credit. Young adults, first-timers seeking to establish credit, and people looking to rebuild their credit after filing bankruptcy. All of these people suffer from low ratings and a lack of good credit. While the path to credit success differs for these three categories of people, all of them are challenged with the task of proving they can handle credit by building a healthy credit history that can be accessed through a credit report check. Getting credit in these situations may require some help from other people. Certified credit counselors and other professionals can often provide some good advice for individuals facing these roadblocks.

Are you in the market for a new home? Perhaps a new car? Maybe you’re hoping to get a home improvement loan. If you are considering any of these, you may want to check your credit rating first. Keep reading to learn what you can do to improve your credit score!

Establishing Good Credit as a Young Adult or First-Timer –

Establishing credit for a young person or someone who hasn’t actively been using credit can be a challenge. As an unproven borrower with a low credit score, it can be difficult to find a creditor willing to take a leap of faith and grant that first important chance. That is why so many people start off with a low score. They simply haven’t had the opportunity to prove their creditworthiness.

One way to get started is to find a parent or some other relative who will cosign with you on a small loan. Since it takes good credit to get credit, having a cosigner who has good credit to sign with you on a loan is a guaranteed and time-tested way to take your first step into the credit world. Car loans and student loans are also excellent ways to get started establishing a positive credit profile for adults just starting out.

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Another way to jumpstart the credit building process is to find someone who will add you as an authorized user on their account. If you have a person who will do this for you, be sure that the creditor asks for your social security number. If they don’t ask for that information, then they may send you a card, but your credit file will not be impacted and you won’t benefit personally.

Repairing Your Credit –

Many people find themselves in the position of needing to rebuild their credit due to credit problems in the past such as going through a bankruptcy. All it takes is an untimely job loss or emergency expense, and a person with good intentions to repay a loan or credit card bill may be unable to meet their obligation. Once a debtor gets behind on their bills, the situation can go from bad to worse quickly as interest and fee charges mount. Far too many people suffer from this problem. It can take years to re-establish your good credit after experiencing a credit issue that results in collection activity or a settlement.

The good news is that there are proven ways to shave years off of improving your credit
report. Industry counselors can guide you through a step by step process and get you back on the road to success. Embarrassment and shame often accompany bad credit. For this reason, many people “stick their head in the sand” for far too long before reaching out for the help they need. Lenders and credit card companies take your credit score very seriously. A poor credit rating can derail a loan process. Even if your credit is decent, if you improve your credit rating you may get a better interest rate on a loan. If you need help improving your credit rating you have several options. However, it’s important to keep in mind that all of the options take time.

Your Credit Score and What You Can Do for It –

Your credit rating (also called credit score) is a number from 300 to 850 which corresponds to your perceived creditworthiness. Your credit score takes into account a number of different factors, including but not limited to the amount of debt you are carrying, how many sources of debt you have, and any accounts that are not in good standing. FICO never reveals just how their scoring algorithm works. That’s super confidential information that they don’t want to release. But we do know that late payments have a BIG negative impact on your credit score.

Check Your Credit Report Often –

There are a couple of things you can do in the short term that can improve your credit rating. First, obtain a copy of your credit report. Your credit report is the record from which your credit rating is determined. There are government agencies who allow you to check your credit report for free once a year. It is a good idea to check your credit report once a year, even if you’re not in the market to borrow. Take a careful look at your credit rating to see if all information, such as married name or a new address, is current. Also, check to see if there are any errors in your report. Errors on your credit report should be disputed immediately. Once the error is removed, it should have a positive impact on your credit rating. Second, if you can, you should pay down any existing debts as much as you can. Lenders look at how much you owe and how many of your credit cards are maxed out. By eliminating some of your existing debt you can improve your credit rating.

Stay On Top of Your Bills –

There are other things that you can do over time to help improve your credit score. One great way to bolster your credit rating is to always pay your bills promptly. If you’re having a period of difficulty, do not just ignore your creditors. Let them know your situation and ask if some arrangement can be made to help you until circumstances improve. Also, if you wish to build up your credit rating it is not a good idea to apply for several new loans or credit cards all at once. This gives a negative impression and hurts your credit score.

Get Help Today –

It’s important to remember that credit problems are common. It could happen to anyone! With this in mind, there is no reason for anyone to suffer for longer than is absolutely necessary to fix the problem. There are proven and practical ways to get your credit rating in a healthy range. Just like Rome, a good credit rating will not be built in a day. Keep working at it, and over time you can build it up. Give us a call at 1-866-699-2227 or visit us online at www.advantageccs.org if you have any more questions about your credit score or getting out of debt!

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.