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Bad Credit vs Good Credit sign
A healthy credit score is of paramount importance if you want to be eligible for future loans. Sustaining a decent credit score is not a far fetched delusion given you manage your finances astutely. Many things can hurt your credit, therefore, handle your credit responsibly and keep it at an ideal level. A few simple mistakes can ruin the possibility of acquiring future credit and greatly harm your financial history.

A few credit score slayers are hard to dodge such as defaulting a mortgage payment because of joblessness or reaching the limit on your credit cards because you are flooded with medical bills. However, numerous credit gaffes are merely due to inattention and can easily be eluded.

Credit Mistakes that Hurt Credit and Financial History

Defaulting on your Bill Payments

If you are uninformed of payment deadlines or unintentionally default on a payment, it can significantly hamper your credit score. Even if you are not reported by the bank to the IRS, it will charge you a substantial penalty that can really hurt your financial history.

Similarly, late credit card expenses can cost you heavy fines. Therefore, it is vital for you to make the due payments within the given time period. To avoid mistakes that can hurt your credit, use automated payment plans offered by banks and other institutions. This will ensure that the minimum amount is paid within the due date and you will have enough time to make the remaining payment.

Failure to Rank Payments According to their Significance

Prioritizing your debt payments is an indispensable component of maintaining a praiseworthy credit score. Most people typically rank their larger loan payments, such as personal loans and mortgages, over their credit card loans, which is the right thing to do. Nonpayment of bigger loans can cause grave concerns for your financial history than simply defaulting on a credit card payment.

Failing to pay your credit card payment will cost you only 1%-2% of the balance. However, do not take this rule for granted. Contingent on the payment amount, you must prioritize the payments.  Some credit card payments should be paid off right away as they are compounded and, if you let them grow for a while, they will come back to hurt your credit pretty badly. Therefore, rank your payments according to the severity of the situation.

Not Checking Credit Report Regularly

Scrutinizing your reports for inconsistencies can seem to be a wearisome task, but it should be performed regularly. There is always a chance of having an item on your report that is charged by mistake or that someone is misusing your credit card information. Checking your credit report regularly will ensure that you find these errors and report them before you miss the deadline and nothing can be done.

You have up to 60 days to dispute these charges and, once the time limit is exceeded, there is no other way. Nevertheless, charges connected to deceitful actions might permit you an extended duration to dispute a charge. Failure to check your credit report can hurt your credit as well as dampen your financial history significantly.  

Terminating Old Credit Card Accounts

You may be tempted to close an old credit card account that has not been used in years. However, unless there is a high annual fee associated with it, it might not be the best course of action. Closing an old credit card account will ominously hurt your credit, which will eventually mean that you become eligible for a lesser credit. Chiefly, it disturbs your credit utilization ratio that is an important element of measuring your credit score.

Terminating your oldest accounts with a financial history of on-time payments can hurt your credit, rather than improve it. Lenders like to see credit accounts that have a solid payment reputation and finishing the account would mean that it is ultimately written off. Instead of influencing your score positively, it makes a major dent in it.

Paying your Tax Bill with a Credit Card

If you don’t pay your federal taxes, the IRS has the authority to levy all of your assets, seize tax refunds, or put a lien against your owned properties. Even with all of those potential hazards, you must never be convinced to pay off the tax via your credit card. There is an interchange fee that has to be paid if you choose this option. The percentage ranges from about 2% to 4% of the total payable amount. Adding that to, an additional 12% – 18% has to be paid to the bank and you will end up with a mind-boggling figure. If unpaid, it will hurt your credit and financial history. Work out a plan with the IRS if you are in this situation and set a payment plan that is adjusted to your needs.



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.

 

 

 

 

 

 

 

 

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.

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.


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.

 

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.

 

Interest rate financial and mortgage rates concept. Businessman hand show icon percent 3d sign
As a shrewd consumer, you most likely have a fair idea about managing your personal credit. However, as a new business owner, you might not yet have the capacity to establish business credit. Your personal credit score will not come in handy if you require business financing at any point in time. Instead, a strong business credit history will be needed. Business credit basically performs the same function as personal credit by measuring trustworthiness. The credit bureaus collect information from vendors, banks, and other business partners to measure your solvency and allot you a score which, unlike a personal credit score, ranges from 0 – 100.

Why Business Credit is so Important

Just as the strength of your personal credit score determines the kind of credit products you are eligible for and their terms and conditions, a business credit score is a vital component in measuring your métier as a business. Your business partners want to see a reliable track record in terms of payments and other financial handlings. The credit score allows them to make informed decisions about your business, therefore, a good credit score can open up the doors to inexpensive and enduring credit in the future.

Ways to Establish Business Credit

While establishing business credit may seem to be an arduous task for a start-up, here are some ways to do that without much hassle.

Establish a Business Entity

As mentioned before, your aim should be to reflect your payment history on your business accounts rather than personal ones. Therefore it’s vital for it to be a separate and registered entity. Your aim should be to identify the entity that offers you the best solution in terms of your needs and creditworthiness. The two most common options are sole proprietorship and partnerships as they are easier to manage at the start. However, these entities are independent.

If you have chosen a sole proprietorship or partnership, it will be hard for you to differentiate and establish business credit as a separate entity. Both structures do not specifically distinguish an individual and the business. Therefore, it is unable to help you in developing business credit.

The proper structures for establishing business credit are a ‘C Corporation’, ‘S Corporation’ or an ‘LLC’ (Limited Liability Corporation). While it’s important to think of a structure that suits your need of building credit, it is not the only thing that matters as the right business structure depends on many other factors as well.

Get a Federal Tax ID

The IRS relies on an employer identification number (EIN) to observe businesses, especially queries related to employee payroll expenses. It is necessary for every business to get this number as it performs a variety of important functions and establishes business credit at the same time. You will be required to file an application with your state or county government office.

Establish a Dedicated Business Address and Phone Number

While it may sound pretty simple, setting a dedicated office for your business along with a landline establishes your credibility which eventually has a positive effect on your credit score. You will be able to register with business directories and just being listed gets a few points added to your credit report. A phone line can establish business credit by developing a formal trade credit relationship with your vendors and other business acquaintances, which is regarded as a good sign by credit companies.

Institute Trade Lines with Suppliers

Maintaining good relations with only a handful of vendors and suppliers is good for your credit score. However, to really enhance it, you must develop good credit relations with a variety of business partners. As your small business grows, you will be able to procure from many different suppliers that will open up multiple trade lines for you. It will be even better if your partners extend credit and allow you to pay after weeks or months as this shows their trust in you, which is great to establish business credit.

Conclusion

As a small business owner, you must realize that building credit will take time and, if you get the basics right, you will rise up the ranks past your competition. Pay off your business loans and bills in time and follow the guidelines above to ensure that you are on the right credit building track.

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.

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.