by Katie Tucker 
There are so many reasons why you should start on the path to credit repair. Your credit score and history play a large role in your eligibility for loan products and interest rates.
Reasons to Fix Your Credit Score
With a better credit report and good credit score, you’ll save money on interest rates and pay lower security deposits. Plus, you may be able to also find lower insurance rates, receive higher credit limits, and stop debt collector harassment.
Not only that, but you won’t have to cross your fingers the next time a lender pulls your credit before you make a big purchase like buying a new house or a new car. You’ll have the confidence you need knowing that your credit score is high enough to cover what you need. Lower interest rates mean more money stays in your pocket. That kind of peace of mind is priceless!
Here are some quick tips to consider as you fix your credit. Try these tips in order for an easy start and sustainable credit score growth.
Check Your Credit Report for Accuracy
According to credit.com 1 in 5 Americans have mistakes on their credit reports and these credit report mistakes can lead to disqualification for mortgage or auto loans as well as increased insurance premiums and interest rates.
Be Cautious with Your Credit Cards
Pay down your current credit card balances and stop making new purchases with credit cards. In fact, you may want to put your plastic on ice. Literally. If your credit cards are frozen in ice then you’ll have plenty of time to decide whether that purchase is a want or a need. If you don’t want as dramatic as an option, you can pause your credit card from making new transactions.
Just because you are pulling back on your credit card use doesn’t mean that you should get rid of it entirely. Don’t close old credit card accounts once you have them under control, as this can affect your credit utilization and make it harder to build a solid credit history. Keep those credit card accounts open, but wisely use them.
Get a Credit Builder Loan
If you’re worried about taking out a credit card to improve your credit, consider a Credit Builder Loan to help build up your credit score. When you borrow a Credit Builder Loan, your principal toward your payments will be help as collateral. Once your loan has been paid in full, your principal will be released back to you. Plus, if you make all your minimum payments on time, you will receive a partial refund on your interest payments.
Rate Shop Before Applying
When you’re ready to shop for new credit, like a mortgage or Auto Loan, rate shop during a 14- to 45-day window (depending on the scoring model). Rate shopping before you apply will help you find the best rate, so you can save more money every month. When you are ready to apply, most credit scoring models will group inquiries by type in that time frame.
Watch Your Collections
Consider paying outstanding collection accounts. Some newer credit scoring models ignore paid collections entirely. According to FICO, medical collection debt under $500 is no longer reported by the credit bureaus and won’t effect your credit. Other collections that are paid in full are ignored by certain FICO criteria. If a collection is the only negative item on your credit report, paying if off can help increase your credit score.
Start Building Your Credit
When I got my first credit card, I wasn’t aware how long it would take to build a good score or how long it would take to recover from a missed payment. Don’t give up! If you build good habits over time, you’ll fix your credit and maintain good scores.
Take the first step and schedule a free credit review with us at Alltru Credit Union. We’d love to help!
