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5 Credit Issues You Can Solve Yourself

Believe it or not, your health and well-being are not just about what food you eat and how often you exercise. Being financially stable can have a huge effect on your physical and mental health and greatly reduce stress.

Unfortunately, when it comes to financial well-being too many people chose the “if you ignore it, it doesn’t exist” approach to debt. If this describes you, you likely rationalize your refusal to look at your credit score by thinking that there’s nothing you can do to change it. But you’re wrong! There are several things you can do to take control of your financial well-being and improve your credit score.

Here are five strategies that you can start using today:

#1– Get to Know Your Credit History

Ignoring a problem is never helpful, especially when it comes to your credit report. Simply taking the first step to request and read through your credit report can take a huge weight off your shoulders. Even if your score is worse than you thought, knowledge is power. Knowing what issues are hurting your credit is the first step to fixing them.

Every year, you are entitled to one free credit report from each of the three major credit bureaus. If you are looking at your credit report for the first time, or after a long period of avoidance, it’s best to get all three at once to compare. Visit annualcreditreport.com today to request yours.

#2– Check the Reports for Accuracy

Once you have read through the reports and gotten a sense of your overall credit picture, you’ll want to take a good look at the details.

First of all, make sure that all of the accounts listed are ones you are familiar with. If you see a loan or line of credit that is unfamiliar, make an inquiry with the lender to ensure it’s not a case of identity theft.

Once you’re sure that all of the accounts are ones you’ve opened, the next step is to make sure that the amounts are accurate. Are there missed payments listed that were in error? Is there an outstanding balance from a few months ago that was actually paid off?

If you see any errors, you can dispute them through the credit bureau. Typically, having one credit bureau fix the error will result in a credit report update with all three. However, it’s always a good idea to check back in a month or two and make sure that the change is reflecting across all your reports.

#3– Pay Off Credit Cards with Small Balances

While it is a good thing to have a few lines of credit to show that you make regular payments in full, having too many revolving credit accounts can hurt your credit score and make it appear that you are over-extended financially.

Typically, it is advised to have between 2-4 revolving credit accounts to show that you have a reliable payment history. If you find that you have several cards, it may be wise to pay off the ones with the lower balances (and higher interest rates) and only keep a few credit card accounts open.

#4– Look at Your Debt to Credit Ratio

When you get a credit card, they will stipulate a credit limit, or the maximum amount you can charge to that card. However, it’s important to not max out your credit limit as this makes you look like you are stretched to your limits financially.

Instead, try to keep your debt to credit ratio at 30%. This means that you have only used 30% of the credit available to you. If your ratio is higher than this you can try a couple different tactics to bring it down. The first, and most obvious, is to decrease the amount you charge to your credit cards. But there is also another thing you can do simultaneously: ask your credit card companies to raise your credit limit. They will likely be willing to do this if you are making your payments in full and on time. Just make sure that you have the willpower to not increase your spending habits before you take this step.

#5– Negotiate

Credit card companies and collection agencies are real businesses, run by real people. This means that many things are not set in stone and that they are often willing to make a deal. Before making a payment on a past due balance or collections account, contact the lender to see if you can negotiate the terms. This could mean having some late payment fees removed if you agree to one or a few large payments, or even having the company agree to update your account to remove it or show as “paid as agreed” if you pay the balance in full.

Although it can seem daunting, taking some time to speak with the companies you owe money to can pay off big when it comes to your wallet and your credit report. Never underestimate the power of human interaction!

There are so many ways to improve your credit and sense of financial well being, there’s really no good reason to avoid tackling your credit issues. Take the first step today and dive into that credit report!

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We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

Missouri: 314.839.9999
Kansas: 913.344.9999
Colorado: 303.740.9999
Illinois: 618.839.9999
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