The daily twists and turns in our nation’s economy have many people wondering what they should, and can, do to help their personal economy.  The good news is that you can take steps now to keep your good credit and to help it grow for your financial future.

1) Pay all your bills on time.  This is the number one part, 35%, of your credit score.  Typically, late payments are only reported on your credit report when the payment is 30 days or more past due.  One late payment can drop a credit score anywhere from 5 to 50+ points.

If you are going to be late with a payment, contact the company and let them know.  Ask for an extension or a courtesy adjustment to your account.  When they agree, be sure to get it in writing for future reference if needed.

If you have already been 30 days late on a payment, contact the company and ask for a one-time adjustment to your records.  As a long-time customer in good standing, many companies are willing to work with you to keep your business.  Again, whenever something is in your favor, get it in writing.

2) Pay down credit card balances and DO NOT close the accounts.  Many people believe that paying off credit cards and closing them will help their credit scores.   The second largest part of your credit score, accounting for 30% of it, is your balance-to-available-credit.  When your credit card balances are over half of the credit limit, credit scores usually go down.  Maxed out accounts have a severely negative impact on scores. 

If you close your credit card accounts, you reduce your overall amount of available credit.  And you can affect two other parts of your score, too; your length of credit history and your mix of different types of credit used.  Additionally, many lenders require at least one open account in good standing as part of their loan qualification. 

Strategy - Pay credit cards down to under 50% of the credit limit.  Keep them open even after they are paid off.  It is okay to have zero balance.  Use them at least twice a year for a small purchase that gets paid off the next month; this will keep them active and included in your scores.

3) Monitor your own credit reports.  You can do it for free and it won’t count against your scores.  This is the most cost-effective way to be sure your credit report is free from errors and to check for evidence of identity theft.   As many as 80% of credit reports have errors on them, usually hurting credit scores.    Having your credit report in good standing now will help your credit rating grow in the future.

Strategy: Practice Identity Theft Prevention to protect your good name and good credit. 

4) Use your budget.  If you have not yet made a personal, household budget, start NOW.   It is challenging to figure out how to keep more of your hard earned money if you do not know where it is going.  Be sure to include the “small” purchases such as stopping at the store for milk and carrying out two bags of groceries.  Or picking up that fast food and morning coffee every day.  You might also decide to cut out the premium cable and just do basic, or reduce the number of monthly subsciptions you have, freeing up more money.  Ask your phone company and insurance agent to do a rate check to be sure you are on the best, most cost effective plan for your family’s needs.

Strategy: Consider cleaning out your closets and garage by selling items that you no longer use or need.  A neighborhood yard sale or free, online classified ads at sites such as Craig’s List can result in several hundred dollars to add to your pocket or to your savings account. 

The small steps you take now can add up to big savings in your financial future.  Contact us today for your Complete Credit Analysis with personalized credit building strategies.