How to Improve Your Credit Score – Simple changes can have a big impact

According to Business Insider, January 2012 brought the first rise in average U.S. credit scores in almost a year. But at an average of 661, credit scores are often well below where they need to be in order for consumers to secure credit in the current economic climate.

The good news is that you can work to improve your credit in some very easy ways, and can bring about a big change pretty quickly:

• Pay on time. One of the most heavily weighted portions of your credit score is your payment history with other creditors. Because your payment history is a good indicator of how you will pay lenders in the future, it is one of the most important aspects a new or would-be lender can consider. In order to improve your credit score, pay all of your bills on time. If you have a history of paying late, then within a few months of paying on time you may see an increase in your FICO score.

• Don’t overspend. If you have a high ratio of balances to limits, this can indicate that you are spending more than you can afford to pay back. If this is the case, then you become higher risk to new creditors. Lowering the balances in your current revolving credit accounts could help improve your credit score by showing that you are using credit responsibly.

• Stop applying for credit. Another indicator that you may be spending more than you can afford is that you continually apply for new credit. If you have many applications out for new credit cards and loans, then you are showing that you are either planning to increase your debt greatly or that you are overextended and need credit for the wrong reasons. If you have a high number of credit inquiries prompted by your applications for credit, this will lower your credit rating. In order to improve your credit rating, stop applying for new credit.

• Keep old accounts open. The length of your credit history gives would-be lenders another way to qualify your risk. Keeping old accounts open will, over time, improve your credit rating, even if you no longer use the account.

Improving your credit score is about patience, determination and discipline. We’re here to help you with all of your credit and financial planning needs. Give us a call or stop by today to see how we can help improve your credit score and make better use of your money.

Getting a Loan If You Have a Low Credit Score – Tips to help you on the road to financial security

According to the San Francisco Chronicle (sfgate.com), the average U.S. household debt (excluding mortgage debt) is about $14,500. If you are among the many in debt and have a low credit score, you may think that securing a loan for a vehicle, college or emergencies is impossible. However, by following some of the tips below, you may find that you actually can secure the credit you need.

• Check your credit report for errors: The first step you should take before applying for a loan, whether you have a high or a low credit score, is to check your credit report for errors. One inaccuracy on your credit report can make a big difference in your FICO score. There are three credit reporting bureaus whose reports you need to check: TransUnion, Experian and Equifax.
• Work with your established financial institution: It is often easier for a borrower with a lower credit score to get a loan from a financial institution with which he or she already has a relationship. Talk to a loan officer to see what he or she can offer.
• Make large payments, on time: Reducing your debt always helps your credit score, but even more important is the process of making payments on time. For a few months before you plan to apply for a loan, make larger-than-normal payments on time; you’ll improve your credit score through that one simple move.
• Pay something off: If your debt-to-income ratio is high, your ability to get a loan will suffer. If your account balances are close to your account limits, your credit score is similarly impacted. Reduce your balance-to-limit ratio by paying off some of your smaller balances before you apply for a loan. Not only will this help your credit score, but it will also reduce the amount of interest you pay to creditors each month.
• Talk to your creditors: If a creditor was paid in full but paid late, that history may be negatively affecting your credit score. You can call creditors to see if they will remove negative history from your report; especially with paid-off debt, they may be amenable to this. Additionally, if a recent late payment was reported to the credit bureau and is hurting your score, but you are generally an on-time payer with that creditor, call the company to see if it will re-report the data to remove the black mark on your credit record.

Our loan officers are here to discuss your borrowing options. No matter what your credit score, stop by to learn about the ways that we can make our lending programs work for you.