Everyone wants a good credit score. Sadly, many of us feel we’re fighting an uphill battle. The good news is that it’s not impossible. You just need a few credit insider secrets to improve your credit potential.
Here are five secrets about the credit industry that can help get your credit on the right track.
1. It’s Your Right to Look at Your Credit Report Anytime You Want
According to The Fair Credit Reporting Act, consumers have a right to look at their credit report to ensure everything is fair and accurate. The U.S. government thought this was so important that they made each of the three major credit bureaus - Experian, Equifax and Tranunion – agree to give every consumer one free credit report per year (note: free credit report, not free credit score). You can get your free credit report at AnnualCreditReport.com.
Many folks think that getting a copy of your credit report might hurt your credit score. This is false. In fact, you are entitled to get your credit report anytime you want without any negative impact; the credit bureaus just don’t have to give it to you free more than once a year.
2. Interest Rates and Fees are Negotiable
Never assume that fees or interest rates are non-negotiable. Your credit cards are the best targets for this money-saving tip.
Inventory your credit cards and write down the current interest rates and any annual fees. These are all opportunities to squeeze a little more cash out of your monthly budget. If you have paid your bills on time and have been a loyal customer, you have the power to reduce the fees. A simple request and subtle leveraging of your “business” can go a long way.
Try a script kind of like this:
Hi [credit card company]!
I’ve been reviewing my credit cards and I noticed that even though I like using your card as my primary credit card, it has a higher interest rate [or annual fee] than my others. I would like to get a more competitive rate. Can you do that for me today?
If the answer is, “Yes,” say: Thank you!
If the answer is, “No,” say: Are you sure? I would definitely need to stop using this card and maybe even cancel it… it simply isn’t competitive for someone with my good credit.
That will typically do the trick and get you a better rate.
3. Credit Scores Can Be Improved
Never assume your credit score is permanently damaged. Even high credit scores can move from medium risk credit to excellent credit, possibly saving you thousands in interest.
[Free Resource: Check your free credit report and score]There are lots of tips and strategies that can raise your credit score that go beyond the obvious “pay your bills on time.” One to of the easiest ways to get that credit score rising is to lower your credit utilization.
Credit utilization is the amount of credit you are using (i.e. balances) versus the amount of credit you have available (i.e. limits). For example, if you have a credit card with a $5,000 limit and you have a balance or charge about $2,500 per month, then your credit card utilization is 50 percent.
A good rule of thumb is to keep that number under 30 to 35 percent.
Here are some credit utilization tactics that might help:
- Distribute high balances across credit cards by transferring balances. Often you can do this and get 0 percent interest for a period of time and bring all your credit cards below 35 percent credit utilization.
- Ask for an increase in your credit limit on all of your credit cards. If you have been paying your bills on time and have had the credit card for a few years, this will be as simple as a quick call.
- Keep old credit accounts open even if you don’t use them. They will keep your available credit high and your credit utilization low.
- In rare cases, typically if you have very little credit history (e.g., new college grad or just started working), you might consider opening another credit card or two to increase your total available credit. CAUTION: Do not let those new credit cards get you in trouble with new debt!
Quizzle Tip: If you want more specific analysis of your credit report and where you have potential for improvement, check out Quizzle’s Improvement Program.
4. Your Credit Reports Can Affect Your Future
Your credit is used for far more than car loans and mortgages. It determines if you have to put down a deposit for your utilities, whether you can get a cell phone without pre-paying, and increasingly if you are considered for that better job.
The bottom line is that a good credit report can help you save money and maybe even make more money.
5. Call Your Creditor If You’re Late on a Payment
Many folks are terrified to call their creditors. This is a huge mistake. You’ll be amazed at what a good conversation with a customer service rep could result in.
If you slip up and miss a payment, call your creditor immediately and arrange your payment. Always confirm payments are received with confirmation numbers. Next, always ask that for the late fee to be removed. If it’s your first time being late and if your payment patterns are healthy, your creditor is likely to remove one late fee every six months to a year.
Lastly, you want to ask (politely) that this little mistake not be reported to the credit bureaus. Remember, asking never hurts! You might be surprised on how effective a simple call can be – just don’t abuse the favor.
Have you learned any secrets about managing your credit? Do you have any questions about your credit? Leave a comment and we’ll continue the conversation.