Whether you’re new to having credit or you’ve had credit cards for years, growing your credit, protecting it and repairing your credit takes work. This guide can help you manage all of your debts and improve your credit score.
Topics in This Guide:
Build or Rebuild Credit at Any Age:
- Access and Review Your Credit Reports
- How High Balances Affect Your Credit
- How Long Does it Take to Repair Credit?
- How to Avoid Paying Credit Card Interest
- How to Improve My Credit Score
- How to Repair Credit Mistakes
- How to Repair Credit When You Don’t Have a Job
- Identity Theft and Your Credit
- Using Your Tax Refund to Pay Off Credit Cards
Credit and Mortgages/Refinancing a Home:
- How to Pick the Best Type of Mortgage
- Refinancing a Home and How it Affects Your Credit
Build or Rebuild Credit at Any Age
If you’re in college, you might ask yourself, am I “too young” to start building credit? The best time for credit-building is when you have a reliable job and pay your bills on time every month.
Your credit report is the history of your credit payments, and items stay on your reports for up to 10 years, or longer for student loans. Typically, you’ll have credit cards, lines of credit, student loans and installment loans. To build credit, use credit moderately and pay the balances quickly.
Access and Review Your Credit Reports
You can receive a free credit report annually from AnnualCreditReport.com using a secure, private computer. You need to enter your social-security number, address and date of birth. Then you can view credit reports from Experian, TransUnion and Equifax and make copies of your report. Remember never to save it on a public computer.
Familiarize yourself with your credit report. It shows accounts that are open, closed, paid-off and in collections. It also gives your payment dates. It may include student loans, installment loans, bankruptcies or other accounts.
Tip: You can access a free credit report from AnnualCreditReport.com.
How High Balances Affect Your Credit
When you carry high debts, you can damage your credit score even if you pay minimum balances on time. High balances let creditors know that you might be struggling to make payments.
How Long Does it Take to Repair Credit?
To repair your credit, businesses have 30 to 45 days to respond to disputes. After that, disputed items like collection accounts are removable.
How to Avoid Paying Credit Card Interest
If you pay your full balance each month, then you won’t have to pay interest. Always pay on time to avoid late fees.
How to Improve My Credit Score
Your credit-card payment history makes up 35 percent of your credit score. To improve your score, keep your balances low. Pay on time and never let accounts go into collections or charge-offs that are 180-days past due. If you fall behind, then make the payment as soon as you can.
How to Repair Credit Mistakes
Maybe you’ve done a search online for “how to fix my credit.” First, review your credit reports and flag anything that you don’t recognize or anything older than seven years. To dispute credit mistakes, select the option “dispute” when your credit report is open and give the reason. For example, maybe you don’t recognize the account, or it’s older than seven years.
Creditors have 30 to 45 days to respond, but you might hear back from them sooner. If they don’t respond, then you can often remove disputed items from your account’s report.
How to Repair Credit When You Don’t Have a Job
If you’ve lost your job and fallen behind on payments, talk to the collection agencies about making smaller payments. You may be able to remove collection accounts older than seven years if you dispute them on your report. Never discuss bills older than seven years with collection agencies because any correspondence reopens the account.
For further help, check with Ovation Credit for credit-repair assistance.
Identity Theft and Your Credit
If you want to know how to dispute credit report charges you don’t recognize when you’re on a credit-report site viewing your report, then select the option to “dispute” on your screen and give further details.
If anyone has stolen your identity, then contact the credit-reporting bureau and your credit-card company. You may need to file a police report to block any further fraudulent transactions on your account. Having a company that monitors your credit is very beneficial to avoid situations like this.
Using Your Tax Refund to Pay off Credit Cards
Use tax refunds to pay off credit-card debts. The average refund is $3,000, and you’ll improve your credit score. With better credit, you can get lower interest rates.
Credit and Mortgages/Refinancing a Home
How to Pick the Best Type of Mortgage
To pick the best mortgage, talk to your bank about mortgage options. FHA mortgages or those by the United States Department of Veterans Affairs can be more-affordable options. U.S. Department of Agriculture mortgages and the first-time buyers program are also worth considering.
Refinancing a Home and How it Affects your Credit
Refinancing your mortgage is taking out a new loan to replace your current loan. People take this step to lock in lower interest rates. When banks run a credit report, it can lower your score slightly. If it’s only one inquiry, then it may not affect your credit that much.
Credit cards often lead to debts and huge responsibilities. By paying your credit-card bills on time, you can have a good credit score and better interest rates for years to come!