Credit Basics

DO YOU KNOW YOUR CREDIT SCORE?

Unfortunately, if you’re like most Americans the answer is probably no. Only 33 percent of consumers know their scores, according to a recent survey published by the Government Accountability Office. If you implement the following nine simple action steps, you will not only know your credit score, but be on your way to improved credit as well. And this could save you tens, if not hundreds of thousands of dollars over your lifetime.

A BETTER WAY TO SCORE

There are lots of tips and tricks to improving your credit score over time. But these eight simple steps will get you started and greatly help improve your credit. Just remember, it can take a few months for these actions to take effect, so if you’re planning on applying for a big loan soon, we recommend you get started at least four months in advance for the best results. By paying attention to your credit score and implementing these simple steps, you’ll be on your way to a higher financial GPA and a score that could save you thousands annually…

GET YOUR OWN CREDIT REPORT AND FIND OUT YOUR SCORE

Call Langdon Mortgage Company, Inc. locally at 317.844.2250 or toll-free 866.844.2250 and we will gladly create a FREE report that will include your credit score from all three agencies and your FICO score. One of LMC’s Mortgage Consultants will then help you, step-by-step, identify mistakes and repair errors.

IDENTIFY MISTAKES AND REPAIR ERRORS

Twenty-five percent of credit reports have errors serious enough to cause consumers to be turned down for a loan or job, according to a survey by the U.S. Public Interest Research Group. That’s 1 in 4 people who could be affected by inaccurate credit scores! Once we have run your report, make sure you double-check every detail and account to make sure it’s accurate. If you find an error, it’s important to make sure your identity has not been stolen. You can put a 90-day fraud alert on your file to protect yourself while you clean up any mistakes. Then follow the directions listed on your credit reports to fix any other problems you find.

CONTROL YOUR SPENDING AND REDUCE YOUR DEBT

Generally, the lower your account balances on credit cards and loans, the better your credit rating. Try to get all of your credit card balances below a 30% debt ratio to improve your overall score. You can also contact your credit cards to see if they will increase the amount they’re willing to let you borrow, but it’s best to reduce your debt load overall rather than give yourself the opportunity to slip deeper into the red.

LIMIT CREDIT CARD APPLICATIONS

Every time you apply for a new credit card, your report will be marked with a lenders’ inquiry note that could have a negative impact on your score. Anytime you apply for a department store card or even a bank loan, your report will be marked. A few of these inquiries are okay, but it’s best to keep them to a minimum.

DON’T CANCEL YOUR OWN ACCOUNTS

If you close your old accounts, you’re shutting down your credit history, which could hurt your score. It’s best to pay old accounts off, consolidate them when they’re with the same company, and just let them rest. Just be sure to cut up old credit cards to protect yourself from identity theft.

ASK LENDERS TO REPORT YOUR CREDIT LIMIT

Ask your banks and credit-card companies to list your credit limit if it’s missing on any accounts on your credit report. If you don’t, Fair Isaac may assume that those accounts are maxed out even if you haven’t borrowed to the limit. This simple step could improve your score by as many as 50 points!

SIGN UP FOR AUTOMATIC BILL PAYMENT

The best way to never miss a due date again is to set up automatic bill payment. Repeatedly paying your bills late is one of the main ways you can hurt your credit score. However, you have to be careful to read your statements because many of the credit card companies are changing their payment schedules. The key is to make sure you never fall behind.

MONITOR YOUR REPORT

Remember, your credit score can be improved over time. You should begin to monitor your credit reports at least once per year and repeat these steps every time your reports are pulled.

 

Source: “The Automatic Millionaire” by David Bach