“There are plenty of people since this recession started who have had or are dealing with credit issues, I came across this article written by Collin Bruce who has specialized in the credit challenged for the past 3 years. Some good tips for all of us as how to maintain and rebuild credit scores.”
Philip
1) Pay down credit cards. The number one way to increase credit scores is to pay down your credit cards so you are only using 30 percent of your credit. Revolving credit like credit cards seems to have a more significant impact on your scores than car loans, lines of credit, and so on.
2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit scores. If there is a balance at the end of the month, this affects your scores- credit formulas don’t take into account the fact that you may have paid the balance off the next month.
3) Check credit limits. Some lenders are slower at reporting monthly transactions, this can have a significant impact on how other lenders may view your files. Ensure everything is up to date, as old bills that have been paid can come back to haunt you.
Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1000 to $1500 – it may appear to the credit-scoring agencies that you are regularly maxing out your cards.
The best bet is to pay down or off the statement before the statement period closes.
4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating the accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the card for a long time. You should use these cards periodically and then pay them off.
5) Don’t let mistakes build up. You should always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation. If, however, you have missed payments on your credit cards, you may not be in a situation where refinancing or quickly boosting your credit scores will be possible. Depending on the severity of the situation - and the reasons behind the delinquencies, including job loss, divorce, illness, and so on – partnering with other professionals such as the ones mentioned above will help you address the concerns.
Written by Collin Bruce, Mortgage associate (expert in the credit challenged for the past 3 years)
www.collinbruce.ca