Keeping Score: Improving Your Credit Part 1

Improving your credit may seem like an uphill battle, but it is possible. If you don’t know how to get started, United Country Midwest Lifestyle Properties has some great ideas to boost your score. Let’s get you on the road to buying a house and improving your credit score!

Pull your credit report

Most folks have a good idea of what got them into credit problems. For some, it may have been something out of their control, like losing a job, and then things spiraled down from there. Others may have lived beyond their means by putting too much on their credit card(s). Whatever the case, you need to have a 360 view of your credit- good and bad.

Your first assignment is to pull your credit report. This is a free service offered by many. Credit Karma is a great place to start! Simply sign up and pull your credit report. It will list your credit score and suggest signing up with TransUnion. We recommend you sign up with TransUnion for an in-depth review of all your credit accounts.

Let’s go over some of the helpful features of Credit Karma. Credit Karma offers its customers:

1. Credit Monitoring–Notifies you of changes in your credit report.
2. Credit Builder–A program designed to help improve your credit 21 points in 4 days.
3. Insights–This feature lets you know what affects your credit and what you can do to improve them.
4. Personal recommendations– Personal advice to fit your credit situation.

In addition, Credit Karma has wonderful resources that you can tap into. Take advantage of Credit Karma.

Fraud and disputes

This is where TransUnion, one of the major credit reporting entities, comes in handy. Credit reporting agencies can and have linked other people’s debt or bad credit to your name. Most of the time, it is a distant relative or family member. TransUnion does a complete review of any credit lines that you have opened up or someone who fraudulently opened up a credit card in your name.

Each credit account will list the debt owed and your payment frequency. The scoring system evaluates the consistency or inconsistency of your payments. It will also list any loans or credit cards the company you owe the debt has charged that off. Even if the debt has been charged off, you are still responsible for it. It simply means they likely closed your account, and a company bought the debt and are looking for you to pay it- it’s called collections!

Cyber fraud and fraud are common occurrences. Your bad debt and collections can make you a target for scams. If you see something on your credit report that is wrong or fraudulent, report it immediately by disputing the claim. Sometimes that matter resolves easily, and others will take time to correct.

Steps to improve my credit

The first step in improving your credit is to pay credit card balances strategically! This means you will need to do some homework and find out the balance between each card and the interest rate on those cards. Here are a few methods to employ when paying off credit card balances:

1. Snowball Method–With this technique, you pay smaller balances off first. This helps you build confidence and works well for people who need immediate results.
2. Avalanche Method–Your focus is to pay off higher balance cards, saving in interest in the long run.
3. Credit Card Consolidation–While not always the favorite, if you can not pay off each monthly balance, this is a way to consolidate your balances and, with one payment a month, pay your balance down. Usually at a lower interest rate.

Improving your credit is a positive step towards owning your own home. There are many steps you can take to gain control of your credit life and give your credit score a boost. Reviewing your credit report and taking steps to pay back credit card balances as quickly as possible while also addressing your spending habits can only boost your credit score. Join us next week for our final article on improving credit.

United Country Midwest Lifestyle Properties agents are eager to help their clients purchase their dream homes. Call us at 608-742-5000 and see why our greatest investments are people and properties.