8 tips to improve and protect your credit score.

The best way to improve your credit score? Follow these simple tips, and watch your credit score go higher!

Tip #1 – Pay your parking tickets. unpaid parking tickets can be sent to collections. Collections, no matter how small, can crush your credit score.

Tip #2 – Do NOT pay collections and expect your credit score to go higher. The credit scoring model only looks at two things on a collection; the most recent activity date and the status code. It doesn’t look at the balance amount. For this reason, a collection for $50 and a collection for $5,000 have the same negative impact on your score. Paying off a collection can only hurt you because it updates the activity date and the $0 balance doesn’t help you.

Tip #3 – A 90-day late payment on a credit card has the same negative impact on your credit score as filing for Bankruptcy. So, no matter what don’t be late, if at all possible.

Tip #4 – Get a secured credit card. Everyone should do this. Just make sure you ask the issuing bank to whom they report the account. If they don’t report to all 3 credit bureaus, then don’t get the card. The whole point is to improve and protect your credit score and the only way to do that is if they report to all 3 bureaus.

Tip #5 – A short sale is far better than a foreclosure for your credit. With a short sale, you have control over the end-date of the event. With a foreclosure, it just depends on when the bank gets around to it. They could take years to process it, crushing your credit score every month along the way. Also, the short sale looks much better on your credit profile. A foreclosure is like giving a lender “the bird”. You pretty much are saying, ‘it’s your house, you deal with it’. In a short sale, you are saying, ‘I can’t pay, but I want to help you get as much money back as possible.’ That will help you get back in a home more quickly down the road.

Tip #6 – Loan modifications are a SCAM. Sure, we’ve all heard of that one person who got an amazing loan modification. They had to do that for a few people to create the myth that it was possible. Loan mods are designed to trap you in to doing whatever the bank wants. This is why they tell you to miss payments or make a lower payment while they “decide” if they’ll approve you. The Bank is well-aware you will have no other options as soon as you miss a mortgage payment and you will be forced to take whatever they offer you. Avoid these like the plague.

Tip #7 – Never co-sign anything unless you MUST. There is absolutely no point in co-signing for a car, mortgage or student loan unless you have absolutely no other option. All it does is give the Bank another person to chase down in the event you can’t pay. It doesn’t help you one bit, but could come back to haunt you.

Tip #8 – Pay your credit card bills before the statement ending date. Most people think the key to building a good credit score is to get a credit card, use it during the month, then pay it off when the bill comes in. They did a good job of brain-washing us on this. Unfortunately, you are falling right into their trap if you do this. By the time you get the bill, the credit card company has already reported it to the credit bureaus. They report each month the balances of your accounts as of the statement ending dates. So, if you pay the account off each month, your credit score will never know it because the credit card company is reporting the balance to the credit bureaus right before you pay it off each month! All you have to do is pay the balance prior to that statement ending date and you will get the credit you deserve.

Let InCreditable Advisors help you make smarter credit decisions when it comes to understanding how Credit Scores work, how to Improve your credit, and how to Protect your scores. Call us today at 317.837.4969 and schedule your free credit analysis.