5 Strategies for Using Your Credit Card to Improve Your Credit Score

Written by adminAugust 8, 2018
Life Style

Here at Financial Helpers, we write a lot of articles that might seem to demonize credit card use. From our experience, a lot of people find themselves heaped in credit card debt they can’t seem to overcome, so they come to us for help.

But that doesn’t mean we’re anti-credit card. A credit card can be a very good thing for someone who is looking for ways to improve their credit. Having smart usage for a certain amount of time can make life a lot simpler down the line.

The better your credit score, the easier it will be to get approved for a car loan, mortgage, and so much more. Not only will it be easier to get approved, you’ll have lower payments than people who have bad credit, as you’ll be seen as more trustworthy.

Having a good credit score is a great thing and being smart with your credit card is the best way to get there. Let’s look at 6 strategies you can use to improve your credit score.

1) Don’t Miss Any Payments

If you struggle to pay your bills on time, then getting a credit card isn’t for you. A necessary tactic in remaining in good standing with any company that offers you a credit card is to pay your FULL balance. One important ingredient to a good credit score is having a decent record make on-time payments.

This one factor makes up 35% of your FICO score, so by missing payments, it can take a huge chunk out of your overall score. That’s why it’s better not to get a card at this time if you’re not financially stable enough to pay regularly. Also, paying in full will cancel out interest on those payments!

2) Use it Like a Debit Card

The safest way to use a credit card is to manage it like a debit card. One of the dangers of swiping credit is you can’t just look at your bank balance to see how much you have left. The money doesn’t actually come out of your account until later when you pay your bill.

Also: http://financialhelpers.com/3-beneficial-times-to-refinance-your-home-mortgage/

Don’t lose track of what you’ve spent and definitely only use what you can afford to pay back in full. A lot of people get into trouble going overboard and when they can’t pay it all back, try to skate by paying the minimums. Then, by the next month, they have an even higher balance to pay and it can get out of control quickly.

3) Keep a Low Balance

30% of your credit score is determined by how much you owe. If you spend way more than you can afford, that high balance will transfer into the next month and will reflect negatively towards your overall score.

The best way to use a credit card to build credit is to NOT use it every single day. Use your debit card as much as you can, but make occasional, smaller purchases with your credit so it’s easier to pay back. With a low balance and good record of repayment, your score will go up.

4) Look at Your Options

There are a variety of different credit cards for you to choose from. If you already have good credit, then it should be no problem getting hooked up with the best cards. If you’re credit is bad and you’re looking for a way to improve it, there are other types available.

Some cards are pre-paid, meaning you’ll have to make a down payment first. If for whatever reason you don’t pay your bill, they will just take what you prepaid. If you stay on top of your bills and do well, that money is often refunded to you. They may also have high interest, but it’s a great way to get started. Find the right card that best fits what you need.

5) Be Smart!

Once again, we only advocate smart credit card use. If you know you have a bed record of repayment, having a credit card can only cause a lot of problems for you in the future and make things worse. But, with smart use, life will become easier. Don’t get yourself caught up buying things you can’t afford and racking up tons of debt.

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How You Can Prevent Student Loans from Destroying Your Credit

Written by adminJuly 12, 2018
Student Loan Consolidation

We’ve covered the ongoing student debt crisis extensively here at Financial Helpers, and we’ve made it our mission to help graduating students know how they can solve their debt problem as quickly and efficiently as possible.

Part of that is having the knowledge to understand how your student debt works and how to tackle it in the future so it doesn’t come back to haunt you. Life can be difficult with this debt, as one small mistake can destroy your credit for years to come.

The best thing to do is know how to handle your debt going in and have a working understand of the credit system. There are three outcomes that can result from your handling of student debt.

1) It can lower your score. (15% of students)
2) Your score can remain the same. (63% of students)
3) You can improve your score. (22% of students)

It almost seems miraculous that you could walk away from student debt with a better credit score than when you went in, but it’s definitely possible if you know what you’re doing.

When you have a higher credit score, you can refinance your loans. To learn how that works, you can give us a quick call today to see if you qualify and to inquire about existing government programs that can reduce your overall debt. It’s worth a quick call if it means saving thousands of dollars over the life of your loan. You can reach us at:

Call Now 1-844-332-2079

It all comes down to personal behavior towards money. Those who increased their credit score were more proactive about taking care of the debt. They kept their credit card balances down, was never late on a payment, and acted to lower their overall payments.

Those who hurt their credit score ended up borrowing more money and added as much as 78% to their overall balance. Missed payments STILL add interest to your loan, so if you’re not regularly paying down the balance, you could be increasing it.

There are 5 specific criteria that are used to determine your score. Make sure you line up with all 5 and you’ll do well.

1) Your payment history. When you apply to borrow money, you give your word that you’ll pay it back. If you keep your word and make on-time payments, that will reflect well on your overall record. It’s a sign of trust and totals about 35% of your score.

2) The amount you owe. One consideration that will be made is how much debt you currently have. If you have a lot of debt, are maxed out on your credit cards, and keep trying to borrow, that will reflect negatively on you. This is about 30% of your score.

3) Your total credit history. Making a couple on-time payments won’t reflect much on your score, but if you show your reliability over time, it can help nudge your score a few points higher. This is about 15% of your score.

4) Are you new to the game? About 10% of your score is made up simply by how often you apply for credit. If you have a lot of attempts, it can reflect as bad behavior versus someone who isn’t constantly applying.

5) Do you have a variety of debt? If you’re able to successfully manage debt across different spectrums, then you’ll increase your score. For example, if you have a mortgage, credit cards, and student loans and you’re paying on them, you will be more trustworthy. This makes up the final 10% of your score calculation.

Again, it’s all about behavior. If you have an active loan, it’s the best way to build your credit and show you can be trusted with other types of debt. Sadly, studies show as much as 43% of students with student debt will default in the next 5 years.

Ethan Dornhelm, Vice President of FICO, had this to say about improving your credit score after college:

“If (students) can find a way to pay that back in an on-time fashion consistently over a period of months and years, they will be in a position when they reach those life cycle events like wanting to buy a house, a car, or a home. Their FICO score will be in good shape as long as they’re managing their revolving debts and keeping them relatively low, not spending more than what they have, and paying their bills as agreed.”

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