Friday, 17 April 2020

How To Get The Perfect Credit Score! - Credit Repair Hack & Tips

How To Get The Perfect Credit Score

Having a good credit score or having great credit history played a salient role to securing a mortgage loan, you could have the downpayment, you can have a great debt to income ratio, but if you have a bad credit score it is going to be difficult to secure a loan with a tier 1 mortgage lender. You don't only need great credit for buying a home although that is one of the things that you need great credit for, you do need it for also renting a home, for leasing a home. If you want to buy a car and finance it you can definitely buy a car and finance it with bad credit, there are many different dealers who offer that, but the interest rate is going to be very high. it is going to be a bad interest rate if you have bad credit.

Surprisingly enough certain employers require you to get a credit check in order to be employed at their establishment. I have had to get my personal credit check twice for two different roles that I have had in different institutions. One as a financial analyst and another as a project accountant, I had to get my personal credit check and it is not only corporate office jobs where you are dealing with finances, but also if you have a hands-on job where you are going into people's home, where you are dealing with high-value assets or you are going around very valuable items like an electrician, a carpenter or a plumber, certain businesses require that their employees get personal credit checks in order to be employed.

  • Having great credit is super important. I know a lot of people always say cash is king and cash is everything, cash is king but credit is power, and if you have the power you have more freedom and more opportunities to leverage cash and do other things. So credit is not a bad thing and it is not something to be afraid of. 

There Is Always A Way To Improve Bad Credit

The amazing thing about credit is if you have bad credit it 100% doesn't need to stay bad. There are multiple different ways and different steps that you can take in order to improve your credit in order to start improving it right away, I personally know people who have gone from terrible credit to very good credit in a fairly short amount of time. So the great thing is that you can 100% start to improve your credit within a short amount of time you will be able to see an improvement in your credit score and another very noteworthy statement I should make is that you don't need to pay someone in order to improve your credit. You can choose to hire a credit repair company or seek out some sort of credit repair service.

Now that we have briefed on the importance of credit, we are going to jump into the step, tips, tricks, in order to improve your credit. 

Let's Get Started

1. Create A Credit Karma Account

Credit Karma is a free service that allows you to see the current standings of your credit history, it lets you see your credit score, open account, your payment histories, credit inquiries. it is your overall credit profile summarized.

It is not the official credit score from TransUnion or Equifax, but it is the closest thing to that it is also a free service and you are able to monitor it as many times as you like without it affecting your credit score. Having a service like this is amazing because you are able to see what is affecting your credit score, what accounts have been reported as delinquent, if you have any collections account open, you are able to see an overall summary of your current credit profile and you are able to monitor your account

  • Delinquent Accounts/Payment: Failure to make payments for longer than 30 days.

There is no guarantee that it is going to be exactly what TransUnion or Equifax reported, however, the funny thing is that what TransUnion and Equifax have reported some time are not even aligned. The only difference with credit karma is that you don't have to pay for it monthly, you don't have to pay for it at all. And the pro to that is that you can check it as many times you want and it is not even a hit to your credit.

2. Only Use A Fraction Of Your Credit

Only spend 30% of your credit limit. That is the rule of thumb and that is the most commonly used rule of thumb regarding your credit, for example, if your credit limit is $10,000, 30% of that would be $3,000. So never go over that $3,000 mark. However, there is a very magical number that they say is how you get excellent credit, not just good credit, but excellent credit is to only use 7% of your available credit. So on a $10,000 limit that would be $700 maximum.

3. Never Max Out Your Credit Card

Do not start maxing out your credit card or going close to the credit card limit because that shows creditors that you are exhausting all resources possible, you don't have any cash on your own and you are relying on your credit card. Although you might pay it off in full every single month when that credit card statement gets reported, you have a balance that shows this month you had zero cash and you needed to exhaust all your credit resources. 

In order to combat that, pay down your credit cards and then subsequently increase your credit card limit. If your cash flow every month permits you to spend approximately $5,000 on miscellaneous, expenses and day-to-day expenses, then your credit-card limit should be at least $15,000 so that every month you are still below about 30%.

4. Make Payments Before Statement Is Reported

Pay off your credit cards entirely if you can and pay them before the statement date. Now, this is understandable if you have a large amount of credit card debt and you are working towards paying it, I completely understand that paying it off in full is not an option. You can pay it down but once you do pay it down just remember that credit card debt is meant for short term debt. Credit cards are not there to be maxed out and then take 2 or 3 years to pay them off. Having a balance on a credit card doesn't serve you any purpose because the interest rate is so high, certain credits cards have a compound interest meaning, every month the interest is on everything that is on that credit card the entire balance of that credit card. Also, it doesn't look too great on your credit report.

When you pay off your credit card in full every month, what I love to do is pay off my credit card before the statement date. Although you might say to yourself that you pay off your credit card in full every month it doesn't matter how much You spend, you max it out every month but you paid off in full every month. That is not conducive to improving your credit score because your creditor doesn't see that zero balance, they only see what is reported to them by your bank or by that credit card institution on the statement date.

So look at your credit card statement and make the payment about two or three days before the statement date so that when they do report it, it shows the lower balance or it shows a zero balance. 

5. Become An Authorized User

You can be an authorized user on somebody's account. How this work is, first of all, the credit card needs to be open for at least 2-years, it also has to have a great payment history so there aren't any late payment on that credit card. When you become an authorized user on that person's account that credit card account now becomes an account on your credit profile and it takes about 60 days for it to instantly improve your credit score.

  • This could be someone like a parent, sibling, it could be a significant other. Let's talk about this. If you are going to put a significant other on your account you have to use your own discretion, you have to use your better judgment, and know if this is someone that you can trust with being on your credit. Whether it is your husband, your wife, your boyfriend, your girlfriend, because once you do marry someone you guys don't instantly have marge credit and you could still have a separate account from your husband or wife and decide to put them onto one of your previous credit in order to help them boost their credit.

But all I am saying is that God forbid if something happens in your relationship and then all of a sudden now you see all these charges at Saks, Nordstrom, Bloomingdale, Amazon, different charges. There is nothing you can do about it because they are an authorized user on that credit card. So just be mindful of putting people on to your credit accounts to help them with their credit and also be mindful and considerate, very considerate and appreciative if someone else puts you on to their credit account to help you with your credit because it is a very, very big deal. If you mess up someone's credit you are messing up their access and the ability to make certain financial moves for themselves so that is a big deal.

That is something that will instantly boost your credit within about two months you will definitely see an increase as long as that credit account was in good standing it is been open for at least 2 years and there are no late payments on the credit card. 

6. Do Not Make Late Payment

Especially when you are applying for things like a mortgage loan late payment is a big deal because they want to be able to see that you have a great history and a great relationship with other lenders. They do look at late payment and they take that very seriously when you are applying for mortgage loans. So do not make late payments. I know that sometimes you have so much going on and it is the last thing on your brain, you have rent, you have school, you have work, you have children, and sometimes you just completely forget. But you have to set up automatic payments or put reminders on your phones or put stickers on your mirror, do something to remind you to pay your credit cards on time. 

7. Negotiate With Collections In Exchange For Deletion

When it comes to the collection this is something you don't need to pay someone to get these collections removed. Oftentimes you are able to call the collections company and negotiate a lower amount in exchange for them to delete the account off of your credit history or you can pay it in full in exchange for them to delete it off of your credit history. However, do make sure that if they do agree to delete this off of your credit history that you get it in writing either a letter or an email stating that they have agreed to have this removed off of your account. That way if for some reason you do pay the amount that you agreed upon and it is still on your account you are able to show that email or that letter as proof and they will honor that. So make sure if you are negotiating with collections and they agree to remove that account off of your credit history that you request a deletion letter.

8. Dispute Account As A Last Resort

If you do not have the time to appropriately followup with the entire dispute process. This is one you can hire someone to help you to remove that off of your credit. However, it should not cost you a lot, to have someone to remove that off of your account for you. But if you do not want to pay someone to do this for you or you don't have the funds you can 100% dispute these accounts on your own. You just need to monitor the entire dispute process and make sure that you are meeting due dates and other things. 

That is it on how to get excellent credit. Hopefully, you learn something from this article.

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