Some of us understand the more complex aspects of finance, but not all of us.
It’s not until we need to use our credit for something, that we realize we’re missing a huge chunk of financial literacy.
This should be something that’s taught in school, but for some reason, whoever is in charge of creating literacy layouts decided that it’s not so important for adolescents to understand how to manage their finances and credit when they become of age.
It’s something that we have to figure out on our own, and in most cases, we mess it up a bit before we figure out how to fix it.
Today, we’re going to touch on a few key points in creating and maintaining a preferred credit rating that will allow you to navigate through life the way you want.
Because let’s face it, you want a car—you need credit.
You want to purchase a home—you need credit.
Hey, even if you want to get the latest iPhone—you need credit.
Let’s check out a few ways to get the credit you need!
1. First Thing’s First—Check Your Credit Score
Now that you’ve got credit on the brain, you need to download Credit Karma and check your credit score for free. This is an incredible free resource that lets you monitor two out of three credit bureaus (Transunion and Equifax).
For some reason, Experian credit management requires a little more hands-on activity. You’ll have to go to their site directly and monitor your credit from their platform. We should also mention that you can monitor your credit from all three individual platforms.
If you want to take it a step further and sign up for credit monitoring services, you can sign up through any of the platforms for a small monthly fee.
Suppose you’re wondering what would be the difference between Credit Karma monitoring and Experian, for example. In that case, it’s the other benefits you get with Experian, such as locking your credit file and identity theft protection. In this day and age, it’s the best way to protect your credit profile.
2. Keep Credit Card Utilization Below 30%
We all get carried away with retail therapy from time to time, especially when you’ve been quarantining for months. It feels like the only thing you can do!
However, make sure to keep your utilization below 30% because this is something that can drastically lower your score. Additionally, it makes you appear more of a credit risk to lenders.
3. Keep Inquiries to a Minimum
Another thing that can lower your credit score is too many inquiries. You’ll get an inquiry when you fill out any kind of credit application. It results in a hard pull from your credit and stays there for two years.
This means you should be selective about how and when you provide your information for hard pulls. Some pre-qualifications only require a soft pull, just make sure to clarify with the company you’re speaking with.
4. Don’t Close Card Accounts You Don’t Use
If you’re not using a card, that doesn’t mean you should close it out. When you close out cards that you don’t use, you’re taking away from your overall credit limit. Let’s say you have a card that has a $5,000 limit. Still, if you close it out, you’ll cause your credit utilization to rise because you’re taking away from the overall limit.
Keeping cards on your credit that you don’t utilize will help your credit score!
5. Dispute Errors You Notice in Your Credit Report
Since you’ll be consistently checking your credit, you should be able to notice any unauthorized accounts that appear. If this happens, you can dispute the account through any platforms such as Experian, Equifax, TransUnion, and even on Credit Karma.
Credit bureaus have 30 days to respond to the dispute. If they don’t respond promptly, they legally have to delete the account from your credit report.
On the other hand, if you have multiple credit accounts that you’d like to dispute, you can look into credit repair agencies since the process can be time-consuming. Make sure to confirm the company’s validity because there are some less than honest ones out there.
6. Bad Credit Isn’t The End of the World
Like we stated earlier, some of us have to learn the hard way when it comes to credit. In this process, you can mess your score up pretty bad. You’ll run into problems getting approved for the basic essentials in life, such as transportation and housing, which can lead to more stress and anxiety.
The good news is that there’s no need to keep stressing! You can fix your credit with a few simple steps.
First off, you have to stay calm and center yourself to make a credit repair plan. If you think about it, you can’t do anything properly if you’re not in the most productive state of mind. CBD capsules are a favorite among the masses for stress-relief because you can get your full day’s CBD in one hemp capsule.
If you’re looking to repair your credit and don’t have any credit (or limited) credit card accounts, look into a secured credit card.
Next, don’t use your credit for anything—let it chill while you rebuild it. You don’t need any more inquiries.
Lastly, make sure you pay your accounts on time!
Follow these tips, and you’ll be on your way to financial freedom and literacy in no time! It all starts with the right kind of knowledge, and now that you have it!