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Steps to Improving Your Credit Score

High school report cards do not follow you around forever, but unfortunately, your credit score report card does. Having good debt is an essential part of adulthood, as it is what allows you to get a car, home, loans, and many other basic necessities that you will need over the years. For many people, maintaining a good score of 700 or above can be terribly daunting, especially if your credit has dipped below 600 and you are struggling financially. Luckily, there are steps to improve your credit score that are sweet and simple.

Analyze Your Credit Score

Before you can know how to improve your credit score, you must know what your score is and look at the factors at play. Many credit card companies and banks offer credit reports to show this data for free, but if not, you can easily get your report through other companies. When looking at your report, pay close attention to your payment history, credit utilization, credit history, new credit, and what kinds of credit you have. Understanding your credit score is essential and, with these factors, you can easily see where you can improve. If the biggest contributor is that you don’t make payments on time, for example, that’s a pretty simple fix you can make in no time.

Evaluate Your Budget

An important first step to improve your credit score is to know exactly where you are financially. Take the time to carefully comb through your income and expenses and see where you can cut back to spend more time and money on getting out of debt. Consider narrowing down your spending on restaurants, activities, and subscription services to get started. Sometimes those items alone can eat up a few hundred dollars every month. You could also consider looking at cheaper grocery stores, requesting lower interest rates, or selling unused household items to help. The more money you can put toward your outstanding balances, the quicker you get out of debt and the sooner your credit score goes up.

Determine a Debt Plan

There are countless debt management solutions and there is no one size fits all plan that works for everyone. However, there is a plan out there for you and your situation and they are specially designed to help you learn how to improve your credit score, as well as get you out of debt. Whether you are looking for help with debt settlement, consolidation, management, or just want to learn some basic skills to keep you afloat, there is a plan out there to help you. A major key to financial success is remembering that you never have to go it alone. There are people and plans available that want to help.

Make Payments On Time

For many people, one of the biggest contributors to poor credit scores is a simple fix — make your payments on time. If remembering the date is difficult to do, try noting it in your phone calendar, desk calendar, or even setting up automatic payments. Many lenders will even allow you to pick your payment due date so that you can line it up with your paychecks every month or spread out your bills so they are a little easier to manage. Regardless of how you do it, it is imperative to show your lender that you are fiscally responsible and can, at the very least, make the minimum payment on your balances every month. Your credit report is essentially a financial scorecard that allows lenders to rate your credit worthiness.

Be Weary of Applications

If you seek out advice from a certified debt relief specialist, one of the first things they will tell you about your new steps to increase your credit score is to stop applying to new lines of credit. You should avoid applying for too many credit cards, loans, apartments, homes, or cars, as all of these actions require the company to perform a hard check on your credit. Hard checks can take a hard hit on your credit, as they make it appear to your current financial lender that you are in desperate need of money or assistance.

Use Your Credit Carefully

One of the other major struggles people tend to have is using their credit card as a debit card. While it does come off as ‘free money,’ it is crucial to remember that everything you spend on your credit card is money you must pay back. And, to keep your interest low, it is optimal to pay that amount back at the end of each month. To help lower your risk of not being able to pay back that amount every month, consider only using your credit card for items you will have to purchase every month anyway. Try using it for utility bills, groceries, or gas and then set money from your bank account off to the side so you are sure you can pay off that balance at the end of the month.

Get One-On-One Assistance

The top foolproof way to learn how to improve your credit score is to meet with a certified expert. By working with someone one on one, they can better assist you in narrowing down exactly what you can do to improve your score and your financial lifestyle overall. At Liberty Debt Relief, for example, they will carefully go through your budget with you, determine how you can better spend your money on debt relief, and connect you with a debt relief plan that is best suited for your situation.

Getting out of debt and living a life unbound by financial burdens can happen easier than you think. When you take the first step to seek out the necessary steps to increase your credit score, you are taking a leap into success. Contact Liberty Debt Relief for a free consultation and to find out how you can get on the freedom track today.

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Can You Have Good Debt and a Great Credit Score?

Debt is one of the most terrifying words in any language. With millions of people going into thousands of dollars of debt every year, many start to wonder if there really is such a thing as good debt and, if so, how they can possibly get it and also learn how to maintain a good credit score at the same time. The truth is that you may actually be able to improve your debt by understanding credit scores and paying close attention to yours. All you have to do is know the steps you need to take to keep your debt manageable and not a burden.

Understand the Types of Debt

When you start working on building your credit and managing debt, the most important thing to do is to understand the types of debt out there and the risks and benefits of each. Credit cards tend to be the most common form of debt, as they make it quick and easy to borrow money with the swipe of plastic. They greatly vary in interest rates depending on your existing credit score, but, the better you maintain your balance on the card, the higher credit limits you can get and the lower interest rates you may accrue. Other types of debt, such as personal loans or mortgages, tend to have higher interest rates and do not really allow you to increase your loan amount over time.

Know What You Can and Cannot Afford

The real secret to maintaining good debt is to know exactly what you can and cannot afford at all times. If you have a high limit on your credit card and decide to make a big purchase but know that you don’t have the income to pay off the card, you will likely end up damaging your credit. However if you only make purchases you can afford or take out a loan that you know exactly how you will pay off without any problems, then you can likely better your financial status. Spending money you do not have, even when it is not directly yours, is what leads to people getting overwhelmed with debt and ending up in situations they cannot find a way out of.

Develop a Plan You Can Count On

Knowing how to maintain a good credit score starts with planning. In order to have good debt and great credit, it is essential that you lay out all the credit and loans you have, as well as the income you have available to pay off those borrowed amounts. The simplest way is to create a budget with all of your reliable income, mandatory expenses, and the amount of credit you have available. Then, make it a rule to spend only what you can truly afford on your credit cards or with any borrowed money.

Improve Your Credit and Financial Health

Remember that the purpose of lines of credit is to build your financial worthiness, not to afford things that you would not otherwise be able to. By only taking on debt that you can really pay off every month, you may be able to truly increase your credit score. Having a high credit score (above 700) allows you to get loans and other lines of credit with significantly lower interest rates in the future, so you can afford to make bigger and better investments all around.

Liberty Debt Relief can help you get out from underneath bad debt so you can start to rebuild your credit. Learn the value of good debt today, and get started on creating a bright and healthy financial future.

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Ways Reviewing Your Credit Report Regularly May Help You

If you are in debt, there is no doubt that you have received some kind of notification about the state of your credit score. For some people, this notification can serve as a wakeup call about their financial health, especially if they are not accustomed to reviewing their credit reports on a regular basis. While your credit report is not something you have to monitor every day, checking in on it every few weeks can significantly help your financial situation overall.

Understand Your Credit History

Your credit report affects the terms of every loan and credit card for which you apply, and your history of successfully paying off loans, negotiating settlements, and taking out new loans makes up a significant portion of this report. When you take the time and focus on reviewing your credit reports every few weeks, you may get a better understanding of what companies you have accounts with, what your spending limits are, and how much you currently owe. You can also see how many payments you have made in the past and for what amounts so that you can adjust your payments in the future and perhaps put more than the minimum payment on your highest credit cards or loans to pay them off faster.

See How Little Changes Can Add Up Over Time

To really reach a point where you are understanding your credit reports, you have to understand how every little financial decision you make impacts your situation as a whole. Regularly reviewing your spending habits can help you see exactly how making monthly minimum payments impacts your score versus paying off the balance in full each month, how opening a new credit card impacts your score versus sticking with the few you already have, and even how neglecting outstanding balances over time shows up on your credit report.

By learning the cause and effect relationship between all of your financial actions and your credit score, you can find out exactly what you need to do to avoid overwhelming debt and create the financial future you’ve always dreamed of.

Detect Problems Before They Get Worse

One of the biggest benefits of regularly reviewing your credit reports is that you are able to see any potential issues before they have the chance to get worse. Credit reports regularly update and include information about every single one of your credit accounts, so you can stay on top of all your financial obligations in one place. In fact, the report is kind of a one-stop-shop for all of your personal financial questions and goals. If you look at your report through an app for your credit card or another lender, it may even tell you exactly what to work on to improve your score.

Another great benefit that many people do not realize at first is that your credit report shows you when people inquire about your credit score. When potential lenders complete “hard checks,” they are taking a thorough look at your credit report. Too many of these hard checks a year can actually lower your score, which is why monitoring the number is so important. When people have their personal information stolen, however, they may find that they suddenly receive multiple hard checks from companies they have never even applied to borrow from. If this or any other issue appears on your report, you can usually call the specific creditors with the issues and have them resolved so your credit score can be fixed as quickly as possible.

Determine Smaller, More Achievable Goals

While understanding exactly what goes into your credit report is an essential part of your finances, that is only part of the process. Your report serves as a base for you to build upon. By actively reviewing it, you will begin to notice what your current situation is like, find out exactly what changes will benefit your situation over time, and watch in real time as your credit report improves. Let’s say that, upon the first few glances of your report, for example, you notice that you have opened several new accounts within the past year and that you have a history of paying your bills late every month. You can make it a goal to seek out fewer lines of credit and to negotiate with your creditors to determine a payment due date that fits your paycheck schedule.

It is easy to say you want to increase your credit score, but the only way to do so is by making changes that count. Finding the little things within your report that are making a huge impact on your financial situation is always the way to go so that you can set up a future that works with you, not against you, and that you can continue to learn and grow from.

If your debt has gotten out of control, you do have options. Liberty Debt Relief is here to help. We excel at saving people money by getting them out of debt through settlement. Contact us to find out exactly where we can help.

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Understanding What Your Credit Score Means How It’s Calculated

Whether you are applying for a new house or apartment, a loan at the bank or a department store credit card, one of the first things a creditor will ask for is your credit score. For many people, understanding credit scores can seem pretty daunting, especially when they do not know how the scoring system works or why it is so important. Luckily, the financial system behind it all is not that complicated, and Liberty Debt Relief is here to help you navigate your score.

What is a Credit Score, Exactly?

To really get a grasp on how important credit is as a whole, it is first important to understand what a credit score actually is. Essentially, a credit score is a simple indicator of your financial reliability used by potential lenders. The score considers five primary factors: Your payment history, credit length, credit utilization, new credit accounts, and the breakdown of your types of credit. Each category has a different weight on your score, which will be broken down below, and is provided on a scale of 300 to 850, the latter being the best score possible.

The better your score, the better financial deals you will get in regards to loan amounts and interest rates. It is important to note that, when you request a new loan or card from a lender, they may complete a hard check of your credit report before granting you a line of credit or loan. Each of these checks goes on your report and too many within a 12-month period can actually lower your score. That’s why it’s important to carefully determine whether or not you need the new loan or card or if you just want it.

Your Payment History

When considering how a credit score is calculated, your payment history takes the lead. Accounting for 35 percent of the total score, your payment history is comprised of various information, including past bankruptcies, settlements, liens and delinquencies, the amount of money you still owe on accounts, and how often you make payments on time versus late, among others.

For FICO — the company that most lenders rely on for tabulating creditworthiness — your history of paying back debts is a large indicator of how well you will handle similar situations in the future. Any and all types of financial loans, including but not limited to mortgages, student loans, credit cards, and personal loans from the prior 10 years, will be included within this subscore. To increase this part of your credit score, make your payments in full and on time and work to make sure you pay off outstanding balances as quickly as possible.

How Long Your Credit History Is

Knowing how long you have held each of your accounts is a vital part of understanding your credit score because the length of your credit history makes up 15 percent of your total score. Generally speaking, people who have held accounts with lenders the longest also have higher credit scores. This is because they have had more time to pay off outstanding debt, remain reliable consumers, and overall gain more financial experience.

For this part of your score, FICO looks at your overall credit history to find out the age of it in its entirety, the age of your newest line of credit, and the average length of all your credit accounts that you have currently and in the past. They also look at how often you use existing accounts.

How you Utilize Your Credit

When most people think of how a credit score is calculated, they automatically think of their purchases. Credit utilization actually accounts for 30 percent of your total score. It essentially tells borrowers how much money you have borrowed and how frequently you borrow it. This category demonstrates to potential lenders how risky you are for their business, and it is why you should typically keep what you owe under 50 percent of your available credit.

For example, people who max out their credit cards every month may suffer from a lower credit score because constantly exhausting funds gives the impression that you cannot afford your lifestyle with your income as it is. Using $2,990 of your $3,000 credit card limit one month, however, does not necessarily mean your credit score will automatically drop, but doing so month after month with no attempts to pay off the outstanding balance may.

New Forms of Credit

An important note to understand about your credit score is that not every financial move has such a heavy effect. New credit, for instance, makes up just 10 percent of your total score. When looking at your credit report, one of the things lenders look for is your most recent financial additions. They want to see any new financial loans you have taken on, how much they are for, and how close together you opened them.

Someone who has recently opened two new credit cards, one personal loan, and one department store card may come off as much riskier than someone who has only opened one additional account in the past two years. This is because a sudden burst in credit accounts gives the impression that you were in dire needs of funds, which can be a red flag. Lenders are more likely to work with people who only borrow money as needed, rather than as wanted.

The Kinds of Credit You Have in Your Portfolio

The other small fraction of how a credit score is calculated is the portfolio diversity itself. FICO designates 10 percent of your credit score to the types of financial lines you have established over the years. While having one of every single kind of financial account in the world is not necessary, having a healthy mix of loans, credit cards, and department store accounts can help you demonstrate that you are reliable on all points of the spectrum. It also makes you seem more desirable to all kinds of financial lenders that you may want to work with in the future.

Get Back on Track with a Settlement

Thoroughly understanding and seeking to improve your credit can be challenging for many people in difficult financial situations. Contact debt consultants at Liberty Debt Relief today to find out what your specific credit report means for your future and how you can improve your score in the most efficient way possible.

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