Money issues are often inevitable. When someone is working hard to repair their good financial name, they may make mistakes. In many cases, getting information from Debthunch can help prevent these mistakes; however, this is not always foolproof. Additional help may be needed. Keep reading to learn more about how to handle money issues and avoid sabotaging their hard work.
Stay Updated on Credit Report Changes
A person’s credit report is a summary of their past and current credit activity. To know where someone stands financially, they need to know their rating. If an individual is not accessing their credit report each year, they may be in trouble. Each person can access their report from all three of the major credit bureaus, for free, once a year.
Along with knowing a person’s credit union, it is also helpful to know what factors go into the credit rating. The components that credit bureaus consider include the credit mix, the total amount of credit a person has, the length of time the person has had credit accounts, credit utilization rates, and payment history.
When reviewing credit ratings, be sure to look for any unusual activity. This is going to help prevent cases of identity theft and other issues.
Don’t Miss Any Payments
A person’s payment history is a crucial part of their credit rating. A single missed payment can reduce a person’s score by 100 points or more. If someone is having a hard time remembering to cover their bills, they should set up automatic payments or an electronic reminder on their phone or another device. If the individual is not able to pay off their balance, be sure to pay the minimum, at least, each time it is due.
Avoid Maxing Out Credit Cards
Credit utilization is an essential factor when it comes to a person’s credit score. In fact, it makes up 30% of the total score. Put simply, credit utilization means how much of a person’s available credit they are using.
Keeping a higher balance on credit card accounts means that they have a higher credit utilization level. To new creditors, this implies a higher risk and may negatively impact their score. To begin rebuilding good credit, it is best to keep credit utilization at 25% or less. For example, if a credit card has a $5K limit, do not let the balance go over $1,250.
Don’t Close Older Credit Cards
When it comes to a person’s credit score, the older the accounts, the better. While it may be tempting to close older accounts, especially if they are not being used any longer, this is not a good idea. Instead, keep them open. This will reflect well on a person’s credit score.
When it comes to a person’s credit rating, there are an array of factors to consider. Making sure the right steps are taken can help ensure mistakes are not made during the credit repair process. Being informed is the best way to ensure that a person’s credit has the best chance of being repaired.