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Improving your Credit - Complete Controller

Credit Rating is the act of building upon a good credit score. It is also a crucial part of financial management as it directly affects your aptitude for borrowing money or getting access to products such as loans or credit cards. Credit scores have a significant influence on your financial lifestyle as it dictates whether your loans or credit cards are approved or not. Credit card issuers give some rewards to individuals with a higher credit score. Credit scores can be checked easily for free on various platforms. What’s your credit score? If you have never checked your credit score, it is time you do as it tells a lot about current and future financial stability. Check out America's Best Bookkeepers

Information on your credit report denotes your credit score. If your credit record shows a few remaining or unpaid payments, you may be charged a high-interest rate by financial institutions and might not be entitled to certain types of loans. If you have a low credit score, you can improve it by incorporating strategies to increase your creditworthiness. These are as follows:

  • Watch your credit card balance:

The most crucial factor to consider, particularly for a credit score, is how much turning (inflows and outflows) credit you have in your account compared to the amount you are using. The lesser the principal amount, the better is your credit score. To boost your credit score, you have to pay your balances and control future spending to maintain a healthy positive balance. If you are dealing with several credit card balances, you may want to consolidate it into a personal loan, which will eventually help you increase your credit score. Check out America's Best Bookkeepers

  • Old debt on your credit record:

According to some people’s beliefs, old debt on their credit record gives a bad impression. As soon as they get some money, they try hard to remove it from their credit file. Although negative reviews on your credit file don’t seem good, many of these records will get purged away after seven years. But, arguing to remove all those negative items from your credit reports is not a good idea to opt for, especially if you are approaching that seven-year tenure. It is best to forget about this debt and concentrate on new debt and paying that off promptly to start building upon your existing score. Good debt is considered as a debt that you have paid well and on time as per agreement. The longer the history of good debt, the better will be your credit report. 

  • Pay your bills on time:

Credits scores are determined by what’s in your credit file. In case you are not paying bills on time or are bad at remembering due dates, you should set yourself a deadline, preferably close to your payday. This would result in you paying all outstanding bills at once without worrying about each date. This behavior will lessen the damage on your credit score and leave a positive impression on your credit file. Check out America's Best Bookkeepers

  • Do not put yourself at risk:

In some cases, you can improve and maintain your credit score by not putting yourself in any risk. For instance, paying an advance payment on your credit card will likely increase your credit score as you will be only utilizing what you have already pre-paid. This sort of financial management ensures a high credit score.

  • Don’t dismiss your credit:

If you know that you will need credit in the future, you should be laser-focused as far as your credit score is concerned. You need to pay your bills on time and responsibly use credit because spending behaviors are the reflection of your credit score.

Conclusion

In most cases, the score your investor uses may not be the same as the credit score shown by your bank or other financial institutions. Your credit grade for different criteria indicates the way you manage your finances. Incorporating the points above will help you improve your credit scores and lead to a debt-free life.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
business credit for financing - Complete Controller

The correct credit score is essential because strong business credit scores can help business owners secure improved interest rates in financing. It might also contribute to decreasing the circumstances to prepay for a particular good or service. It also helps to ensure enhanced trade terms along with valuable suppliers in a specific industry.

One of the chief reasons people in business lack funding is the failure to understand their credit. In the American Dream Gap Report of 2015, approximately one in four trade companies do not know why their loan applications were rejected. Yet, trades that knew their business credit scores had 41% or more likely to get accepted for minor business financing. Check out America's Best Bookkeepers

Putting the Business on Map

If you have just initiated the business or are about to start the company, it might not be necessary to put yourself on the map. You can’t establish credit before building the business. For this reason, acquiring a business phone number and getting listed in the directory might be the most appropriate option. A credible company must obtain a phone number. Depending on your business’ nature, you might also be willing to open the bank account with your official business name and pay the bills with your official business account

 

The Establishment and Maintenance of effective Credit Relationships with Vendors and Suppliers

From a business perspective, an unbroken line of credit with vendors associated with an industry is the gold standard. Effective relationships are likely to assist you in preventing the payment upfront for services or goods. If you can secure a line of credit terms with suppliers who report the payments to business credit reporting agencies, you can create a positive business credit history. Your suppliers or vendors are not bound to report to the credit bureaus. Thus, it will be beneficial for you to be proactive and open accounts with these suppliers or vendors. The formation of effective credit relationships with the vendors or suppliers requires bookkeeping, to avoid payment-related ambiguities. Check out America's Best Bookkeepers

Acquiring the Employer Identification Number

In the business world, it is also beneficial to acquire Federal Tax Identification Number, also stated as EIN. This social security number is useful for your business. It depends on the nature of your business, and you may require opening the bank account by using your business name. Acquiring the employer identification number is likely to contribute towards securing your business contracts.

Credit monitoring

Approximately 25% of the business owners reported that credit reports are likely to possess significant errors. In this regard, the strict and regular monitoring of your business’s business credit history might assist you in identifying false issues and blemishes. In case you found the errors by yourself, you must file a dispute by contacting the reporting agencies.

Always Pay on Time

Paying on time is the first and foremost rule aligned with any favorable credit situation. Payment of bills within the provided timeframe indicates the reliability and ability of management, alongside the amount of debt conclusively. Considering late payments, specifically including obligations, tend to affect the rating of credits and harm the status of the company. Check out America's Best Bookkeepers

Access to a Business Credit Card

Possessing a credit card for business with an organization that already has an extensive credit report is a practical approach for creating commercial financing. However, be careful to avoid over-expansion of personal business financing.

Consider incorporating your business.  When adding Inc. or LLC to your company, you will legally separate your business and personal data. If you choose not to do so, your business and personal credit cards (among other things) will be legal.

Transfer business expenses away from personal finances

Once you have opened a credit card, a credit line, and a bank account, those accounts will be associated with your company’s legal name, keeping your accounts separate. Add your new company or Limited Liability Company; it will create a great distance.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
credit report - Complete Controller

A credit score is a powerful indicator in assessing the economic status of an individual. The lenders and banks mainly utilize it before providing you the loans for different purposes. Several businesses have started to use a credit score to make decisions about giving loans to individuals. Through the credit scores, lenders also evaluate your future capability to pay back loans and determine the risks of loan money. It also provides the basis for setting the interest rates on your loans and credit cards and deciding whether to approve the request of a credit card. Companies that give car insurance also use the credit score to set the rate of monthly installments. Utility companies also evaluate a credit score before establishing new services for you. To offer a job, a promotion, or to increase your salary package, some employers also consider credit history. Check out America's Best Bookkeepers

Payment History

The payment history comprises 35% of the total credit score. The way you manage your payments impacts the credit score. Payment issues such as bankruptcy, charge-offs, foreclosure, and repossession can have adverse effects on credit score. Timely payments of your bills can positively affect your credit score and prevent you from having future difficulties in applying for multiple types of credit.

Level of Debt

Your debt level is 30% of your total credit score. It happens that despite your timely payments of bills, your requests for credit cards and loans can still get rejected due to your debt level issues. The calculations of credit scoring like the FICO score cover a few factors that impact your credit scores, such as the overall amount of debt, ratio of credit card balance and credit limit, and the association of total loan amount and your loan balances.

If you possess higher loan balances or higher levels of debt, it could impact your credit score unfavorably. Fortunately, it is possible to reduce the credit score by paying down the loan balances. Check out America's Best Bookkeepers

Age of Credit History

Your credit score also considers the period for which you have been using credit. The age of your credit history includes the average age of all the accounts in your possession and your older account’s age. It comprises 15% of your credit score. The older credit age is beneficial for credit scores as it shows that you have a vast experience of handling the credits. On the other hand, new accounts present on your record history harm your credit score and decreases the credit age. In this scenario, the opening of several new accounts is typically not suitable for loans or insurances. However, if you manage your timely payments, it would not have many effects on the credit score. 

Types of Credit Used by you

The FICO formula also uses your types of credit while determining our credit score that whether you use a mixed kind of credit or not. Types of credit mainly cover 10% of the total credit score. There are two major types of credit accounts, which are installment loans and revolving accounts. Suppose you have both types of credit accounts than it would positively affect your credit score. It indicates that you have the experience of various kinds of accounts, which is beneficial for your credit score. However, if you do not have any of the accounts, it would not affect your credit account due to its lesser percentage. Other accounts include store accounts and mortgages. Check out America's Best Bookkeepers

Credit Inquiries

Every time you apply for the loan, credit card, or insurance with the requirement of credit check, then an inquiry shows on your credit account, which shows your credit-based application. It also encompasses 10% of your credit score. Few queries do not have much impact, but when the number increases from two within a shorter period, it costs tens of points and affects the credit score. For this purpose, make fewer applications at one time and this can prevent you from this issue. Fortunately, the inquiries made during the last 12 months are considered suitable for the credit score. Note that bookkeeping is an effective way to check your credit score by keeping records of financial matters.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
check credit score - Complete Controller

For any business or individual, improving credit is a tedious journey, as it doesn’t happen overnight. Credit scores consider years of past financial behavior, all being recorded on your credit report by three different credit bureaus. They are keeping separate accounts of your credit scores. Therefore, the scores may vary. However, the credit score puts more emphasis on the recent information, which means you always have a chance to get your score on the right path.

Certain factors are more significant than others for improving credit score. Payment history and credit utilization ratios are among the most imperative in many credit scoring models. When combined, they can profoundly influence your credit score. Check out America's Best Bookkeepers

Payment history

When you apply for a loan, lenders look at your credit report to analyze it. One factor that the lending institution is interested in is your payment history because past payments history is a good predictor of future behavior. Some of the best and easiest ways to improving credit is by paying all your utility bills, monthly mortgage payments, credit card bills, and other payments in time. Late payments or partial payments are corrupt for your credit scores and should never occur. 

It is essential to highlight that all kinds of payments, including auto or student loans, should be paid on time. It is always good to use all the available tools and resources to make these payments effectively. Using calendar reminders and automated payments are some of the tools available at your disposal.

In case you are lagging on a specific payment, it is best to bring them current as soon as possible. Though late payments show as negative information on your credit report, their effect can reduce over time.

Improving credit with a credit utilization ratio Check out America's Best Bookkeepers

The credit utilization ratio is also an essential measure of your credit score. It calculates by dividing your total credit card balances by your total credit limit. The rate is measured for all your credit cards as well as for each card individually. Lenders prefer individuals who have a low credit utilization, typically 30% or lower. A small ratio signifies that you have not maxed out on your credit card limits. Therefore, you are more likely to manage your credit well. Improving your credit requires you to maintain a low credit utilization ratio, which can be achieved by paying off the debts and keeping low credit card balances. 

When you open up a new credit card account, it increases your credit limit. Still, it will open up a hard inquiry on your credit report. Too many inquiries can negatively influence your credit score and remain on the report for up to two years. However, maintaining a low credit utilization ratio will ensure that this does not cause any cause. Check out America's Best Bookkeepers

Changes that can affect the credit score

Some people often wonder how specific actions can alter their credit score. For example, when you close two revolving accounts, whether it will make any contribution to improving credit score. To answer this question and many others, you must realize that your credit scores depend entirely upon the information present in the credit report. Any change in that information will impact the score positively or negatively.

Closing two revolving accounts do lower the number. However, it will lower your credit limit, which will eventually raise your credit utilization ratio, therefore, negatively impacting the credit score. It is also possible that one change affects many items in your credit report and completely understands it. You will have considered each situation individually.

Few guidelines for improving credit

  • Minimize your debts
  • Abstain from applying for credit unnecessarily
  • Watch your credit card balances
  • Do not write off old debts that no longer exist
  • Pay bills on time
  • Use a calendar

Following the tips mentioned above will ensure that your credit score keeps improving over time, making your life a lot easier.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Discussion

When you have a better credit score, you are able to obtain loans with better terms and lower interest rate. You need a good credit score, it is necessary to borrow money for some personal reasons includes a car loan, credit card and a home loan etc. You can also purchase inventories and get the facility for the startup and growth of the business. Repairing a credit score is the major problem for the improvement of professional work. It only depends on the situation. However, if you do not have a good credit score, it is important to settle some of your debts to improve your credit score.

Here are four important steps that repair your credit score.

1.   Review your credit report

You should review your credit reports. There are so many credit bureaus that are required to review your credit report. They can provide you a copy without any charges once a year. These credit bureaus include Experian, Equifax and TransUnion.

There is another way to check and review your credit report, Credit Karma. It is the free services that provide an accurate credit report. Only you have to sign up and make an account on that site. And then you can easily see your credit score and view all the information that is contained on your report. Somehow your entries might be same but not always. A credit report is rarely identical across all credit bureaus.

2.   Pay your bills on time

Another way to repair your credit scores, to pay your bills on time. Moreover thirty-five percent of total credit scores are based on the payment history. The payment history shows your ability to make your payments on time. You will receive a payment notification on time once you paid your bills. In case, you receive late payment notification and potential insufficient funds (NFS) fees insufficient money in your account. Then your credit score will be affected adversely. So, it is important to pay your bills on time. You can also pay your bills in advance.

3.   Lower your credit utilization ratio

The credit utilization ratio is considering thirty percent of your credit score. Credit utilization ratio is one of the most visualize financial term. It shows the revolving debt and availability of revolving credit. You can also calculate your total revolving debt by dividing your total available revolving debt. Many lenders borrow less than thirty percent of credit that is less risky. However, a credit utilization ratio of fifty percent is the lower threshold of the credit score. Hence, to work with forty-nine percent maximum credit utilization ratios repairs the credit score. It is mainly closer to thirty percent where you can get better control over credit score.

4.   Close all your new credit cards

The last step to repair your credit score to close all your new credit cards. If you have a low credit utilization ratio than you can easily repair your credit score. If you have few credit cards then you can easily get a good credit score.

In this way, close your all new credit cards and keep your old cards. If you close your previous cards then you will definitely lose your payment history. You could also increase the limit on your credit cards. There are two important mechanisms in this step. The first one is to transfer all your account balance to the card with the longest payment history and the second is to avoid the temptation of shopping on credit.

 

 

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, 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, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Improving your credit score means qualifying for better terms and lower interest rate. To need a good credit score, it is very necessary to borrow money for some personal reasons includes a car loan, credit card and a home loan etc. You can also purchase inventories and get the facility for the startup and growth of the business. Repairing your credit score is the major problem for the improvement of professional work. It only depends on the matters and situation. However, if you do not have a good credit score, it is not nearly to solve the problem or correct the situation in the sudden period.

Here are some important four steps that repair your credit score:

1.   Review your credit report

You should review your credit reports. There are so many credit bureaus that are required to review your credit report. They can provide you a copy without any charges once a year. These credit bureaus include Experian, Equifax and TransUnion.

There is another way to check and review your credit report by Credit Karma. It is the free services that provide an accurate credit report. Only you have to sign up and make an account on that site. And then you can easily see your credit score and view all the information that contained on your report. A credit report is rarely identical from one credit bureau to the next.

2.   Pay your bills on time

Another way to repair your credit scores, you have to pay your bills on time. Moreover thirty-five percent of total credit scores are based on the payment history. The payment history is the ability to make payments on your bills on time. You will receive a payment notification each time once you paid your bills. Then your credit score will be affected adversely if your payment is missed or your account has insufficient funds. You can also pay your bills in advance.

3.   Lower your credit utilization ratio

The credit utilization ratio is considering thirty percent of your credit score. Credit utilization ratio is one of the most visual financial term. It shows the revolving debt and availability of revolving credit. You can also calculate your total revolving debt by dividing your total available revolving debt. Many lenders borrow less than thirty percent of credit that is less risky. However, a credit utilization ratio of fifty percent is the lower threshold of the credit score. Hence, to work with forty-nine percent maximum credit utilization ratios repair the credit score. It is mainly closer to thirty percent where you can get better control over your credit score.

4.   Close all your new credit cards

The last step to repair your credit score to close all your new credit cards. If you have a low credit utilization ratio than you can easily repair your credit score. If you have few credit cards then you can easily get a good credit score.

In this way, close your all new credit cards and keep your old cards. If you close your previous cards then you will definitely lose your payment history. You could also increase the limit of credit cards. There are two important mechanisms in this step. The first one is to transfer all your account balance with the highest history and the second is to avoid the temptation of shopping on credit.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, 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, critical financial documents and back office tools in an efficient and secure environment. Complete Controller’s team of US based accounting professionals are certified QuickBooks™️ ProAdvisor’s providing bookkeeping, record storage, performance reporting and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay services. With flat rate service plans, 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.

 

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.

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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.

 

 

 

 

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.