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High Angle View A Person Filling Credit Score Form
Your financial health is crucial for maintaining a stable lifestyle. Not only does it reflect well on your personal profile but it is also critical in matters related to your bank and finances. Credit is the deciding factor when you apply for a loan, either for a home mortgage or a loan for your favorite car. Credit scores can affect financial health and stability of an individual and, hence, keeping a constant check on this score can greatly influence one’s purchasing habits. Your credit score will determine if you qualify for lower interest and insurance rates or not. Therefore, if you are among those individuals who are actively seeking ways to get their credit score to rise, you will find 7 ways to do so below.

1. Monitor your Credit Report

The first and foremost step towards improving your credit score is to monitor it thoroughly and make it a habit. According to research, credit reports tend to have errors that can be harmful to your financial standing, thereby affecting the overall score. With the rise in identity theft and credit card frauds, it is likely that there may be inaccuracies in the report. Make sure to check for these and keep an eye on your credit score often.

2. Lower your Debt

Another way of raising your credit score is through paying off debt. Even when partial debt is paid off, the credit score tends to go up. Hence, instead of having to move around these obligations, it is recommended that you reduce debt obligations as much as possible. Credit Utilization Ratio is a measure of one’s debt as a percentage of the total credit available. A lower ratio is usually preferred in order to improve the credit score significantly.

3. Request a Higher Credit Limit

Alternatively, an increase in a credit limit may be acquired if sufficient cash is not available in order to settle debt obligations. When the total credit limit is higher, the credit utilization ratio is likely to go down, ceteris paribus. However, an important point to note here is that if you have a poor credit history in the past, this limit increase request may not be entertained. It all comes down to how well you manage your shopping and spending habits!

4. Pay your Bills on Time

Payment history has a substantial impact on your credit score. The simplest approach to achieving a higher credit score is through prompt payments. Analogous to bookkeeping, an individual can keep a record of all of their debits and credits in order to track balances and arrears at the end of each month. Arrears may be settled once cash becomes available.

5. Don’t Close off Accounts

In order to maintain a reasonable credit score, keeping all your new and old bank accounts open can be helpful. Each one of your accounts contributes to your credit history and closing either one will effectively lower your credit score. Moreover, if any one of the accounts becomes redundant, instead of having it canceled, it is better to keep it operational.

6. Keep your Balances Low

Make sure to keep lower balances on your credit cards in an attempt to improve your credit score. Account balances should effectively be below 75 percent of the available credit. This must be ensured in order for it to reflect well on your credit score.  This can be exercised by keeping a track of the balance on a month to month basis. A little more effort from your end can pay off in the long run.

7. Improve your Buying Habits

Lastly, a healthy credit score can be maintained if your buying habits are tweaked a little. For all of you shopaholics out there, keep your expenditures spread across various months in order to avoid draining your available credit limit. This is likely to ensure a balanced credit usage between months. Payments can be made as soon as the month ends, hence, improving your credit score each month. A viable balance of payments and credit usage can thus be achieved.

Conclusion

Using these 7 easy tips, you can improve your credit score without having to worry about subsiding the urge to purchase your favorite items.

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About Complete Controller® – America’s Bookkeeping Experts
 Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Stacks of coins and dollar bills, blackboard in the shape of a house with text "CREDIT SCORE" on wooden background. Business and Financial concept
Credit scores and credit reports are a reflection of how well or poorly you have managed your finances. If your credit report is showing negative information, it becomes critical for you to get rid of any unpaid debt. Otherwise, you may be charged with an exuberant amount of interest. If your credit report is showing bad reviews of your financial behavior, it will be difficult for you to obtain credit from other creditors. You may still get some credit, if and only if you collateralize it with a property or an asset. But, if you don’t own any valuable assets to use as collateral, you will not be eligible to get any form of credit which leads to a worse financial situation.

In order to get rid of bad credit scores, the only option you are left with is to start rebuilding your credit. Improving your credit score will help you get approved for loans or credit cards and, as a result, you will be rewarded with better interest rates. A bad credit score is one that is equal to or below 619 per the FICO score. Follow the mentioned steps below to get your credit score back on track.

Review your Credit Report

Make sure to review your credit file so that you know your financial position. By doing so, you will get a better idea of what points need improvement. Do you have late or missing payments? Is your credit file showing that you have a higher rate of debt-utilization? Reviewing such information will help you formulate a plan on where to start in order to improve your credit score. You also need to check your scores to know whether there are any errors or inaccurate payment details that are present without your knowledge. If yes, then dispute the problem and get those debts removed, which will automatically improve your score. In case of any dispute, FTC offers some great rewards which will help you rebuild your credit score.

Catch your Payments

Your payment history has a major effect on your credit report. If you fail to meet your payment deadlines, it will not be possible to improve your credit score. In fact, you will only be making it much worse. If you are finding it difficult to make your payments on time, you should contacting your creditors in order to get a more suitable payment plan. Make sure to be up-front when contacting your creditors and explain your whole scenario. Let them know that you still want to pay for your responsibilities. You can also ask for services from a credit counseling agency to make a proper payment plan.

Pay your Bills on Time

You can slowly rebuild your credit by paying your bills on time. This also includes paying non-credit card bills such as utility, phone, internet, etc. Late rent and missed utility payments are reported directly to credit bureaus. Payment history helps you to establish a reliable pattern in order to improve your score. Make sure that you are not falling into the bad habit of making late payments. If you have the option to make automatic payments from your bank account, utilize this so as to not miss any more future payments.

Avoid Closing Credit Card Accounts

Try to avoid closing your credit card accounts, whether you use them or not. The longer the history of your credit, the better it is for your score. However, if you are far behind on your payment deadlines, the only option you are left with is to get a payment plan. A payment plan is required to cancel your credit card account. But, make sure to track the history of your credit score in order to rebuild it.

Pay Down Debt

Credit utilization is another factor to consider in order to improve your credit score. Credit utilization is a way to measure how much debt you have and it is expressed as a fraction of the available credit that you use. For instance, you have an available credit of $10,000 and you only use $7,500; the amount of your credit utilization is 75%. You need to make a plan to pay off your debt more rapidly by using the approach of credit utilization. Reducing your debt will help you to improve your credit score.


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About Complete Controller® – America’s Bookkeeping Experts
 Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Bad credit word on grey background
Everyone isn’t a master at banking, bookkeeping, accounting, and economics. We can all make mistakes that hurt our credit scores and ratings, without even knowing it. Here is a guide to what mistakes you might be making, in order for you to improve your credit score.

1. Closing Old Credit Cards

Once you’ve paid off a credit card bill entirely, it is tempting to cancel the card to avoid getting another big bill again. Many people choose to close their accounts like this but what they don’t know is that they are actually hurting their own credit rating. This is because closing a card causes you to have lower available credit and available credit, along with the history of credit cards owned, both affect your credit rating. It is a much better decision to keep an old credit card open and avoid using it.

2. Maxing out Credit Cards before Bankruptcy

When considering filing bankruptcy, many people find it tempting to put extra expenses on their credit cards, anticipating that the debt incurred in those expenses would be wiped out when filing bankruptcy. However, upon seeing that someone maxed out their credit cards right before bankruptcy, creditors can and will take measures against your bankruptcy in court. This can also lead to a judge rejecting your petition for bankruptcy, causing a much bigger financial crisis.

3. Applying for Gas Station and Department Store Cards 

It may sound really smart to have all of your gas expenses on one card and all grocery related expenses on the bill of another credit card. Unbeknownst to consumers is the fact that these cards come with extremely high interest rates. It is much better to go for Visa or MasterCard credit cards which have much lower interest rates. Moreover, having several accounts will adversely affect your credit score. Therefore, only apply for an additional credit account when you really need it. 

4. Cosigning for Someone

It isn’t easy to decline a request from someone close to you to cosign for him/her on any kind of loan. However, it isn’t commonly known that cosigning can result in pretty bad consequences for someone’s credit rating. Not only is your credit score under threat, you might even be liable to pay the loan if the person you cosigned with fails to pay. 

5. Sharing Personal Details

Calls asking for sensitive and private information such as credit card numbers or your social security number are scams looking to target vulnerable groups (such as the elderly). Calls like these are usually from criminals trying to use your personal information to steal your money. In the case that you ever fall victim to identity theft, it is best to report it to the police department and the Federal Trade Commission. Criminal activities through your card can badly hurt your credit score.

6. Accepting Offers for New Credit Cards

Offers from credit card companies are rampant. According to statistics, there are billions of offers sent out by companies every year. Accepting these offers is neither a compulsion nor a wise decision. The solution is just to say no if you are ever targeted in a sales pitch. Ask to be removed from telemarketing lists and reject any offers from mortgage and credit card companies coming via email and phone. More credit means more hits taken to your credit rating. Accepting tempting offers can hurt your financial position through loans that take a lifetime to mature or plans that involve high interest rates.

7. Ignoring Credit Reports

It is important for you to check credit reports at least once every year if you want to maintain a good credit score. Sometimes, a once a year check might not be enough so you should keep a routine check on how you use your credit card. If you are only making minimum payments, missing out on payments, or not thinking about how you will pay your bills when you are charging your card, you should halt your credit card use and seek professional help from a credit counseling nonprofit agency.

8. Opting for Credit Repair Schemes

Many people who go through a personal crisis such as bankruptcy, foreclosure, or divorce end up with a bad credit rating. Falling for a credit repair scheme offering to quickly fix your credit score sounds like and is too good to be true. It is essential for you to be wary of firms that promise to fix your credit standing in order to avoid paying a high fee upfront and being subject to multiple hidden charges.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

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A business credit score reflects the ability of a business to pay back a loan. It is rated on a 0 to 100 scale. 

Calculating Your Business Credit Score

Your business credit score is calculated by using the statistical algorithm, designed to measure several traits of your company and financial history.

Among these factors are:

  • Credit use ratio
  • Payment history
  • Length of credit history
  • Unpaid debts
  • Public records, such as bankruptcies, liens, and judgments
  • Business size
  • Business risk

Some of the factors are similar to calculating a personal credit score, however, there are many factors that are different in building business credit scores.

How to Build and Improve Business Credit Scores 

Get a Business Credit Card or Line of Credit

Of course, the first step in building a business credit score is to get a business credit card. You can also get a line of credit for your business. Be sure that you are getting a business credit card for your business financing, not a personal credit card for your individual finances.

Separate your Business and Personal Expenses

This is not only important for avoiding accounting mistakes. This is also essential in building credit scores for your business.

Select your Supplier and Lenders with an Eye on your Business Credit

Many small businesses have incomplete business credit accounts because their dealers and moneylenders don’t report costs to the business credit unions.

Pay Your Bills On Time or, Better Yet, in Advance

If you want to make sure that your business credit score is high, then you must pay on time. A delay in payments ruins your business credit and a delay in payments from your company affects the cash flow in other businesses. This is the same as when your clients do not pay you on time and it badly affects the cash flow process of your small business.

Much of your business rating depends on how you pay your suppliers and other contractors within an approved time frame. If you pay in advance or on the spot, this practice will make your business credit even better. Your suppliers and contractors will further put remarks like “prompt”, “pays early”, etc. 

The reason for such nice additional remarks is that every business needs a prompt cash flow for its running. Other companies might also be going through cash flow problems. Early payments or payments done on time significantly reduce cash flow problems.

Your business credit score is used to measure the lending and credit risk linked to your company. A good business credit score shows that your company can manage debts and finances efficiently.

Utilize Credit, but not Too Much

Your business should utilize the credit score it has, but make sure not to overuse it. If you continue utilizing your business credit score for your business operations, it will be beneficial. You will keep building and utilizing some of your credit scores. It is just like taking a loan and paying it back promptly. It builds a trust in your business’ ability and financial stability. But, consuming all of the credit score or too much of the score means your company is not financially stable and is relying on the credit score it builds over time.

Fix Errors on your Business Credit Score Report

If there are errors in your consumer credit report, there is a fixed process for disputing them. However, for business credit report errors, there is a different process everywhere. Every bureau has it’s own procedure for disputing business credit errors. You can submit disputes electronically.

Conclusion

Using a business credit card or line of credit helps to build your business credit score. You have to build and keep improving your business credit score by making on-time payments, using the business credit card, and continue utilizing some of its scores to your benefit. All of these steps build a better and more trusted image of your business.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Financial credit recovery busness concept as a woman and man as bank or banking advisors repairing an old rusted piggy bank with a fresh coat of paint as a savings improvement metaphor with 3D illustration elements.
Upholding your credit score is the most treasured investment you can make in your financial career. Your credit score is going to govern whether you are entitled to a student loan, auto loan, mortgage, or business loan. Your credit score is also an imperative factor when you apply for insurance, loans, rent, or even buying a cell phone. The utility of having a good credit is seen everywhere and you will notice it evidently. However, to improve your credit score, there are certain measures that must be undertaken by an individual or business.

Track Credit Reports for Precision

Because every creditor links the risk of granting a loan with your credit score, it is vital to keep a constant check on it. Credit reports are engendered distinctly for everyone and they are the most widely used means to measure financial risk. There are three major credit bureaus that maintain separate reports for individuals as well as businesses. There is a possibility that your credit score is recorded contrarily by each bureau, so there might be slight differences. Therefore, it is suggested to check your credit reports once every few months so that appropriate measures can be taken to improve your score.

Cultivate a Healthy Financial Track Record

Everyone has a financial history and a certain credit score assigned to their name. However, to develop that, you must institute a healthy and responsible financial track record. If you have paid off your preceding overheads in time or sustained an old credit card account, it will add up to improve your credit significantly. Keeping older credit card accounts open is a great way to improve your credit score as it is generally a good sign because it demonstrates financial discipline on your behalf. Also, if you have made regular payments on your credit card, you will be surprised to see your current credit score, in case you haven’t already, as it will surely be on the higher side.

Do Not Open Multiple Credit Cards at One Time

The best way to keep a healthy credit score is maintaining a steady and unwavering financial record without many disparities. If you open or close multiple credit cards or other accounts at a single time, it may result in a hard inquiry on your credit report. This kind of behavior is considered risky and unnatural by credit bureaus and would definitely influence your credit score negatively. Therefore, it is vital that you do not make unwary financial decisions that can make it tough for you to improve your credit score.

Pay Bills and Debt On Time 

Paying off bills in due time is a chief influencer in maintaining a healthy credit score. All categories of utility bills, loan payments, credit payments and other expenses make up your bills. Fresh payments are weighted more on your credit report. Therefore, even if you have defaulted on past payments, they can be overridden by making current payments on time.

Do not miss a whole payment because it can stay on your credit report for up to 7 years. Pay whatever you have on hand at the moment and the rest can be taken care of later. To improve your credit score and avert missing payments, register for an automatic payment plan with your service provider. There are also certain inducements for students to enroll in auto payments by charging a low interest on the balance.

Leave Old Debt on Your Report

Some people believe that old debt on their credit report is bad. As soon as they pay off the debt, they quickly try to remove it from their credit report. Though negative items are considered to be stains on a credit report and will automatically get removed after 7 years, it might not be such a bright idea to get rid of them so soon.

The debt that you have handled properly and paid off in full is considered to be good debt. This is actually good for your credit score in the long run. Good debt that has a long history on your report will significantly improve your credit score. Leaving old debt and good accounts on as long as possible is a great way to turn something negative into something positive. Old accounts that have a solid repayment order should also not be closed because of the same reason.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

 

 

 

 

High Angle View Of A Person Holding Stamp On Approved Credit Application Form
Cash flow is a lifeline of any business and it will be affected adversely if you have not devised a plan for controlling credit. Your debt will eventually turn into bad debt which will increase the amount of interest, marginalize profits, and, eventually, may lead to business closure. Yet, in many businesses, credit is the fact of the matter and, by denying credit, you lose potential customers. By following a few unpretentious measures, you can keep track of your credit, which will also lower the risk of uncollected payments.

If you are in manufacturing, wholesale, service or retail business, and it is indispensable to offer your customers credit, there must be a policy in place to limit credit losses.

Steps to Controlling Credit

Research the Client

Before you give away credit to any client, you must do your research to ensure that they a good reputation. Ask the client to fill out a credit application. The application highlights key information about the client including the amount of required credit, who can access credit, credit arbitrator, and other germane information. All of this information should then be assessed according to controlling credit policies and the decision should be made whether to approve or reject the credit request.

Approve and Invoice Promptly

Once credit has been approved for a client, you should not wait. Generate your invoices promptly along with a credit approval letter. The letter should state all terms and conditions including due dates, interest, credit amount, and all of the other main details. In order to ensure prompt payments, this is an important step as the client must know these key details in advance.

Maintain Updated Records

One of the recipes for efficient credit management is to preserve precise and current records. An aging of debtors that includes the time it will take to pay off the debt should be available at all times. If a client has been given a special consideration in return for early payments, they must be kept separate for future reference. The way you perform your bookkeeping functions will have a significant impact on the management of your records. Therefore, always use professional services if you are in doubt about your ability to keep everything updated.

Defaulted Payments

When you are running a business, it is probable that some of your credit offerings will default as you are trading with a diversity of clients. Don’t panic, as this is normal in businesses that deal in credit. Nevertheless, you are still required to formulate a policy that will accommodate all concerns related to outstanding payments. Typically, a phone call to your client will solve the issue. However, if that doesn’t work, you need to have a backup plan. Just like offering discounts for early payments, late payments should be met with fines or penalties so that the borrower will make a real effort to make the payment on time. Controlling credit requires you to set your penalties at an optimum level so that it does not result in lost customers or money.

Talk to the Right People

Every business has certain people who are responsible for making decisions and are in charge of setting the direction. When dealing with other businesses, ensure that you are in contact with the right person as others might not have authority. You may end up making a credit deal with a low-level employee who doesn’t have much say in the decision making. One way to avoid such scenarios is by holding at least one face to face meeting with the client so that you are certain about who you are dealing with. In fact, this should be a part of your controlling credit policy to ensure that credit is only offered to the people in charge.



Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

 

 

 

 

 

 

Man Holding Smart Phone Showing Credit Score Application On A Screen
Improving your credit score is among the most valuable investments you can make in your financial career. Your credit score is going to determine whether you are eligible for a student loan, auto loan, and mortgage or business loan. Your credit score is also an important factor when you apply for insurance, rent, or even choose to buy a cell phone. You can see the utility of having a good credit score almost everywhere. However, to improve your credit, you will have to take certain measures that are explained below.

Track Credit Reports for Accuracy

Because every lender associates the risk of lending a loan with a credit score, it is imperative for you to keep an eye on it. Credit reports are generated separately for each individual and they are used as a common way to measure risk. There are three major credit bureaus that maintain 3 separate reports for your credit score. It is quite possible that your credit score from one bureau differs from another and there are some inaccuracies. Therefore, it is recommended that you check all of the credit reports at least once a year so that you can file for discrepancies, if there are any.

Develop a Financial Track Record to Improve your Credit

You have a financial history and certain credit score assigned to your name. However, to improve upon that, you must establish a healthy and responsible financial track record. Whether you have paid off previous payments on time or maintained an old credit card account, everything will add up to improve your credit. Older credit card accounts are usually a good sign as they show financial discipline on your behalf and, if you have made all payments in due time, your credit score will already be on the higher side.

Do not Open Multiple Credit Cards at one Time

One way to keep a healthy credit score is keeping a stable and consistent track record without any anomalies. If you open or close multiple credit cards or other accounts at once, it may result in a hard inquiry on your credit report. This kind of behavior is not considered normal. The point is to not make impulsive financial decisions which can make it hard for you to improve your credit further.

Pay Bills on Time

Paying off your bills in due time is a major contributor to a positive credit score. All sorts of utility bills, loan payments, and student loans make up the majority of your bills. Recent payments are weighed more on your credit score. Therefore, even if you have missed a payment in the past, you can override it by making all of your most recent payments on time. Never miss a complete payment because it can stay on your credit report for 7 years. Even if you have a small amount at hand, make sure you pay something.

To improve your credit and prevent missing payments, enroll yourself in an automatic payment plan with your service provider. There are also certain incentives for students to enroll in auto payments as they are charged a lesser interest rate on the balance.

Avoid Constantly Switching Employers

Justifiably, this isn’t always possible. However, if you have the option and ability to retain a certain job, it is a wise choice in case you are seeking good credit. Lenders like to see consistency in employment as steady income means that you have a greater chance in succeeding with a payment. Retaining the same employer for 5 or more years will significantly improve your chances with lenders. Of course, this doesn’t mean that, if you don’t like your current job, you should stay with it just to improve your credit. Although, it is important to remember that this does increase your credibility among lenders as well as show positively on your credit report.

Similarly, frequent residential changes and having judgments filed against you in court would seriously harm your credit score and must be avoided at all costs. For businesses, maintaining comprehensive bookkeeping records, evidently, improves your credit score.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

Label on a glass jar with the inscription - credit. Glass jar with coins. Financial concept on wooden background

Building credit is not an overnight task as it builds slowly over time. Getting a loan, mortgage or lease requires you to have a good credit score which highlights that you have behaved financially responsibly in the past. Good credit reduces risk because you are more likely to make your payments on time. Students and young individuals who are going to start building a credit history must make smart decisions to ensure a safe future. Doing things right from the start obviously has its advantages and maintaining a good credit score is no exception.

Get Help

Anyone in your family who has a good credit history can help you start the credit journey imperiously. Opening up a loan account with a cosigner who has a good credit history is a great way to kick-start the process. The cosigner simply guarantees the payment in case you are unable to make it and should be someone who trusts you. The credit score of a cosigner can suffer as well in the case you are unable to pay so, before taking this option, all terms must be cleared out to protect both parties.

A Starter Credit Card

A starter credit card is specifically built for people who are starting their financial journey and usually have lower credit limits of up to $300 – $500. However, the interest rates are significantly higher compared to mature credit cards. Student credit cards allow you to build up your credit gradually and upgrade your cards when you build some credit. People having a little bit of credit history can opt for capital one credit cards which have a high rate of approval among starters. These cards come with no annual fees and offer better rewards if you keep a good history of building credit.

Watch your Credit Card Balances

Another significant factor in measuring the worthiness of your credit score is how much revolving credit you have versus how much you’re actually using. For a better credit rating, the percentage should be on the smaller side and often the optimum percentage in 30% or below. Paying off your balances and keeping them low will ensure that this percentage stays down. Consolidating your credit card balances with a loan can also help you score valuable credit points. Building credit with credit card issuers that accept multiple payments throughout the month should be your priority at all times.

Leave Old Debts on the Credit Report

There is a general perception that having a debt on your credit report is a bad sign and that you should hurry to get it removed as soon as you pay off the loan. While it is true that negative items affect your credit score for worse and generally stay on your report for almost 7 years, getting them removed might not be such a bright idea. If you have paid off the debt, you have converted it into good debt which is good for building a credit score. Keeping your old accounts that you have a history of paying open is also something that is recommended by credit building experts. Therefore, never try to get rid of old debts that have been paid off.

Pay Bills On Time

If you are trying to make a big purchase related to a house or car, you must plan for it in advance rather than skimping on your regular bill payments and scrambling for money from here and there. A good credit score requires you to invest time by maintaining a steady flow of payments, month after month. Ruining all of the effort and diligence by missing a single payment is never a bright idea because it will take years to build that again. Building credit requires you to have patience and implement smart strategies to keep your financial and bookkeeping needs in order.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

 

Hand with chalk is drawing Credit score concept on the chalkboard.
Wouldn’t it be awesome if you always had enough cash to buy whatever you wanted? Few have the liberty and liquidity to actually turn this into reality with their efficient use of credit. If used wisely, credit can alter your life in ways you can’t even imagine by allowing you to afford the lifestyle of your choice. It can fund your dream house or help you buy that dream car. You can further renovate your house as you please and spend quality time with your friends and family. The possibilities are endless, provided you make wise credit decisions.

Why Efficient Use of Credit is a Very Good Thing

People use credit for different purposes depending on their preferences. Basically, the purpose is to fill the affordability gap, which will ultimately allow you to live a blissful life. Using credit efficiently has far-reaching benefits other than just affordability. A responsible use of credit results in a positive credit history and good credit scores on your credit report. Having a good credit score means that you will automatically qualify for better insurance rates, open up mobile accounts will smaller security deposits, and will help you secure loans for your business or personal use. The responsible use of credit also shows your credibility to your employer, which eventually translates into career growth.

Understanding How Credit Works

Whether it’s a loan or a credit card, asking for credit means that a lender will look at your credit report for information about the management of your finances. Even if you want to do business with some other company, they will look at your credit report for clues, along with your bookkeeping records. Your credit report includes all of your financial history and your previous use of credit. Basically, your creditworthiness is determined by your credit report by anyone lending you a loan or looking to do business with you.

Your credit history translates into credit scores which go up and down, depending on your financial decisions. Any missing payment on a loan or credit card will result in deductions from your credit scores, while making timely payments will improve your scores. The scores are the precise measure of your likelihood of paying back a loan. Therefore, lenders rely on them heavily.

There are certain types of credits that are revolving, such as credit card payments, and there is no fixed end date for repayment. A credit limit is set for the use of credit and you can borrow up to that limit and then pay part of it back every month. There is a certain interest rate that has to be paid along with the payments, which is accrued each month.

How to Improve Your Use of Credit

Because of the fact that all of your financial decisions are converted into scores, all types of credit impact them. Making responsible financial decisions in the early stages of your life will have fruitful consequences in your future. Don’t waste credit on things you can live without and always pay off your debt in time. Once you build up a solid credit history, you will have plenty of opportunities to do what you desire.

To ensure that your use of credit is handled responsibly, review your credit reports and scores regularly. Keeping track of your report will allow you to make informed decisions about your financial life. Here are some ways to build up your credit.

  • Paying off all of your utility bills and other similar payments on time each month can significantly amplify your creditworthiness. Set up automatic payments for these type of payments so that you don’t miss them.
  • Ensure that your credit card debts and other revolving loans are regularly paid off. Keeping low credit card balances is always a good idea because unsecured credits are always more expensive than the secured ones.
  • Pay attention to the use of credit for all types of credit. This shows the lender that you are able to manage different credit types efficiently, therefore, creating a responsible image.

A smart use of credit will elevate the standard of your life in all possible ways and taking steps to improve your credit only leads to improving the quality of your life.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

credit score gauge
A worthy credit score is of significance if you want to be entitled to future loans. Maintaining a good credit score is not a distant dream, provided you manage your finances wisely. Handle your credit responsibly and avoid making credit mistakes to keep your score at an optimum level. A simple mistake can ruin the possibility of acquiring future credits.

While some credit score killers are difficult to evade, such as failing to make a mortgage payment because of unemployment or maxing out your credit cards because you are swamped with medical bills, many credit blunders are simply due to negligence and can easily be avoided.

Credit Mistakes to Avoid

Not Paying Your Bills On Time

You may have the required amount to pay off a loan, however, if you are unaware of the deadline or accidentally fail on a payment, it could cause a major dent in your credit score. Even if the bank does not report you to the IRS for paying a late fee, it will charge you a hefty penalty which otherwise could have been avoided. Late credit card payments can be charged very high penalties. Therefore, it is important that you pay the amount due on time. To avoid credit mistakes related to late payments, you can use an automated payment process offered by banks. This will pay off the minimum amount and give you enough time to make the remaining payment.

Prioritizing Payments Incorrectly

Prioritizing your debt payments is an essential element of keeping a worthy credit score. Most people usually prioritize bigger loan payments such as personal loans and mortgages over credit card loans, which makes sense. Defaulting on a bigger loan payment can result in more critical financial circumstances for you, rather than missing a credit card payment which is going to cost you 1% or 2% of the balance. However, this is not a hard and fast rule and, depending on the payment amount, you should prioritize the payments. Some credit card payments might be necessary to pay off as they are compounded. Therefore, prioritize according to the situation.

Not Checking Your Credit Report Regularly 

Checking your bills for any discrepancies can be a tedious task but it must be undertaken regularly. Sometimes, there could be items on your credit report that are either charged by mistake or if someone has misused your credit card information. You will never be able to know about any possible errors if you do not check your credit report from time to time. You can dispute these charges within 60 days and that is only possible if you are aware of them. Though, charges related to fraudulent activities might allow you a longer time to dispute a charge. Not checking your credit report is one of the worst credit mistakes you could make.

Closing an Old Credit Card Account

You might be tempted to close an old credit card account, which has remained unused for quite a while. However, unless you are being charged a high annual fee, it can be a grave mistake. Closing a credit account can significantly lower your credit score which will ultimately lower the amount of credit you can acquire. Basically, it affects your credit utilization ratio which is an important component of measuring a credit score.

Closing your oldest cards with a history of on-time payments can be the worst credit mistake as it can significantly dampen your chances of acquiring a loan. Lenders like to see credit accounts with a long history of on time payments. Closing the account means that it is eventually written off from your credit report. Instead of having a positive impact on the credit report, it actually affects it negatively. Even if you are not using an old credit card, it’s better to keep it in a drawer and make recurring payments to it so that the bank does not close it due to inactivity.

Conclusion

Avoid these credit mistakes, at all costs, if you want to promise a secure financial future for yourself.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.