Your FICO credit score is something you may not think much about until you need it for making a big purchase, but it affects you in more ways than you think. In fact, according to new data by LendEDU, an online marketplace for student loan refinancing, one in five Millennials have never even checked their credit score. This is a big mistake. Your credit score comes into play not only when you want to buy a car or rent an apartment, but in areas that include the interest rates you pay on loans, the deposits required by utility companies, and the premiums you pay for your insurance. So a low credit score may already be costing you money, and you may be making financial errors that make your situation worse.
The seasoned and compassionate Ohio debt-relief attorneys at Fesenmyer, Cousino, Weinzimmer know that there are steps you can take to increase your FICO score, as well as what can make it go down. We offer a free consultation to examine your individual financial situation and determine what debt relief solutions will work best for you. Call Fesenmyer, Cousino, Weinzimmer at one of our office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or contact us online to set up your free consultation so we can help you find practical ways to improve your credit.
Here are mistakes you want to avoid in order to improve your credit:
- Not knowing your credit score
You can check your score for free at myBankrate or Credit.com’s free Credit Report Card, and you can request one free copy of your credit report per year from Equifax, Experian and TransUnion at AnnualCreditReport.com. Examine your credit reports and make sure there are no errors or inconsistencies and report any errors in writing and have them removed immediately.
- Not using credit
You might think that the less you use credit cards or take out loans, the better your score will be. Not so. In order to build good credit, you need to show that you have taken out credit cards or loans and have been responsible about making payments.
Of course, that means you need to make timely payments on any outstanding debts. If you can’t qualify for a major credit card or if you are worried about overspending, you might consider setting up a secured credit card account. You do this by depositing money, usually $200 to $500, into a secured account at a bank, which will then give you a credit card with a credit line that’s 50% to 100% of the deposit. This gives you a spending limit, and if you use the secured credit card responsibly and make all of your payments on time, it helps your credit score grow.
- Applying for too many credit cards
On the other extreme is applying for multiple credit cards within a short period of time. This is common when people sign up for new cards to get perks such as cash back or discounts on shopping. Unfortunately, this practice can damage your credit score, as each time you apply for a card, the creditor will run a credit check before you are approved. This creates a temporary drag on your score, and having new cards lowers the average age of your credit history, also lowering your score. Another problem — you may get into trouble if you are tempted to run up balances on multiple cards.
- Not paying down high credit card balances
Even if you’re making your payments on time, it is a red flag to lenders if you keep high balances without paying them down. There is something called a credit utilization ratio (CUR), which is the percentage of your credit limits that you are using. The CUR is factored in when your credit score is calculated, and if it is higher than 50 percent, it negatively affects your credit rating.
- Not being current with your bills
Any time you are late with bill payments, it can damage your credit score and get you on track for missing more in the future. Do whatever you can to meet your payments, whether it is setting up an automatic bill payment system (as long as you have enough money in your account to cover them) or setting up your phone or computer with reminders to pay bills before they are due. Make it a policy not to charge anything you can’t pay off immediately.
- Not meeting your contracts
Don’t be tempted to avoid meeting contracts and paying what you owe. Be sure to make final payments on bills and leases, and do not run up excessive mileage on car leases or damage and fail to pay for property such as an automobile or apartment.
- Using Credit Repair Services
Credit repair services and payday loans often charge exorbitant fees and should be avoided. If your score is low, you should rebuild by contacting creditors and arranging payment plans yourself or with the help of an attorney. There are legitimate credit counseling resources that can help you learn about and develop good credit practices. You can find a nonprofit credit counseling service at www.nfcc.org or by calling 800-388-2227. The US Trustee Program Web page provides a list of debtor education resources.
Contact Us and Get Help
The experienced Ohio debt relief lawyers at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to anyone, and that sometimes help is necessary to get you on the right financial path. We are dedicated to helping you improve your credit card score and deal with any other financial problems. We offer a free initial consultation to carefully evaluate your individual financial situation and give you the information you need. Delaying can only worsen your situation, so call Fesenmyer Cousino Weinzimmer today at one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation so we can determine what debt relief solutions will work best for you.