Top 8 Credit Health Tips For Bad Or No Credit
Today, your credit score is used for more than just loaning money. Employers may run a credit check before they decide to hire you, especially if you will be working with company finances or assets. Utility companies will check your credit before establishing an account and insurance companies confirm that you are credit-worthy before issuing a policy in most cases. If your credit is bad or if you have not established credit, you could also pay much more in interest on credit cards, mortgages and other types of loans. These eight tips can help you improve your credit and help you save over time.
1. Credit Monitoring
Because you want good credit, it is important to monitor what is on your credit report regularly. Credit reporting companies may make mistakes and you could have an item on your credit that is not yours. A social security number could be entered incorrectly or someone with a similar name may have a loan that was not paid properly. Credit monitoring also protects you from identity theft which occurs when someone uses your name and social security number to obtain credit illegally. It is possible to monitor your credit on your own but few people have the time to do so regularly. Credit monitoring companies can not only help you rebuild your credit but can protect you from credit problems in the future.
2. Credit Repair
Everyone makes mistakes and if past mistakes have led you to poor credit, hope is not lost. There are ways that you can raise your score but they can take a lot of time, energy and patience. If you don’t have the time to focus on repairing your credit, you may want to seek the assistance of a credit repair agency. They will review your credit report and work to remove any items that are incorrect or outdated. They can also provide you with tips on methods to improve your credit more quickly.
3. Debt Consolidation
When you have several credit cards and loans, those accounts can have a negative impact on your credit score, especially if the balances are close to your limit. You can quickly improve your score by combining all those accounts into one debt consolidation loan. Often, a debt consolidation loan has a lower interest rate than credit cards, allowing you to combine all the cards into one low, monthly payment. This can also help your credit score as your debt-to-income ratio will improve as the credit cards will show no balances, yet you will still have a credit limit. One thing to remember, however, is not to use the credit cards until the debt consolidation loan is paid in full or to only charge what you can pay off completely the next month.
4. Credit Building Credit Cards
If you are just starting out and have no credit in your name, a credit building credit card is a great way to start building credit. There are many credit cards designed for those who need to start building credit and for those who have bad credit who want to improve their score. Be sure to look at annual fees and interest rates before choosing a card.
5. Credit Building Savings Accounts
One way to build your credit is through a credit building savings account. For this type of account, you are lent a specific amount of money which is placed in a savings account, usually a certificate of deposit, that you cannot withdraw. You then begin making payments on the loan and the bank reports your payments to the credit bureaus. When the loan is paid in full, you are able to withdraw the funds in the savings account less fees and interest. The funds are yours and you should see an improvement in your credit rating.
6. ID Monitoring
Once you have improved your credit score, you want to protect it. ID monitoring is a service that watches your credit report and alerts you if something suspicious occurs. If someone attempts to open an account in your name, you will receive an alert. There are several types of monitoring services with most offering legal assistance should your identity be stolen while you are using their service.
7. Personal Loans
Another way to improve your credit score is through personal loans. You can use the personal loans to pay off credit cards or to purchase items you need. The key is to pay the loan payment on time or early each month in order to improve your credit. If you have credit cards, many experts advise that you use personal loans to pay them off in order to protect your debt-to-income ratio which has a pretty big impact on your credit score.
8. Auto Loans
When you need a new car, your credit will have a major impact on what you can purchase as well as how much you will pay each month for a new vehicle. There are many auto loans available for those with low or no credit although you may pay a higher interest rate than someone whose credit is good. Many banks and credit unions offer auto loans specifically designed for those with bad credit in order to help them improve theirs if they can demonstrate that they are now financially able to handle credit.
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