5 Ways to Give Your Credit a Kick in the Pants!
By Michelle Black

Earlier this week we discussed The 5 Fastest Ways to Damage Your Credit.  If you have not reviewed this list yet, please take a moment to check out the article.  It may save you from making a detrimental mistake which could set your credit score back as much as 100 points!

However, today we will be focusing on a subject that is always much more enjoyable: Ways to improve your credit.  Since the 3 credit bureaus (Equifax, TransUnion, and Experian) all have a different system they use to determine your credit score, it is impossible to predict specifically how much any one action will change your credit score.  Still, we do know that if you heed the following advice, your credit scores cannot help but to improve with all 3 of the credit bureaus (as long as no new negative actions on your credit counteract the new positive changes):

1.  Make payments on time.
I always like to start with this recommendation because payment history is the single most important factor making up all 3 of your credit scores.  A whopping 35% of your credit score is determined by your ability to make your payments on time.  Even if you have had some recent late payments (within the past 24 months) that have damaged your credit score, if you make a plan today to start paying your current bills on time you will start to slowly dig yourself out of the hole. Plus, if you want to dig yourself out of the proverbial credit hole even faster you can check out some of the great services that HOPE has to offer.
2.  Have enough open credit cards.
It is important to have open revolving accounts (AKA credit cards) on your credit report.  Your credit score is a snapshot to potential lenders of how you pay your bills.  Therefore,  if you do not have enough open accounts, you may have low scores or even no scores at all. HOPE members, please check with your HOPE credit specialist to see if it is recommended for you to open additional credit card accounts or if you already have enough active accounts appearing on your credit report.
3.  Pay down open credit cards.
Yes, it is definitely recommended that you establish some current credit card accounts if you do not currently have enough open.  However, it is not recommended that you establish any new debt by charging up the balances on your credit cards.  If you do have balances on any of your current credit cards, especially if the balance is over 50% of your credit limit, aim to pay off your credit cards ASAP.  You could potentially see a huge increase in your credit scores by following this advice.  (Note: current HOPE members can contact us to request a HOPE Snowball Debt Payoff Worksheet for help making a plan to pay off your current debts.)
4.  Check your credit report for mistakes/erroneous information.
All 3 credit bureaus are quite notorious for making mistakes on our credit report.  Even if your credit report is in pristine condition, it is important to check your credit report 1-2 times every single year to make sure that there are no new errors being reported.  The good news is that you are legally entitled to a free credit report (minus your credit scores) every year from www.annualcreditreport.com.  Make sure to check your report with all 3 credit bureaus.
5.  Use old credit cards occasionally.
Your length of credit history makes up approximately 15% of your credit score.  This means that those older credit card accounts on your report actually help to boost your credit scores more than new accounts.  Often a creditor will automatically close a credit card account if you do not use it for a prolonged period of time due to inactivity on the account.  Solution?  Use your old credit cards several times per year for a small purchase (which you pay off immediately) in order to keep your older accounts open and active.

Don’t forget, if you or someone you know is in need of professional credit advice or assistance, we would LOVE for you to take the time to consider the services offered by the HOPE Program.  We want the opportunity to answer your questions and offer our unique expertise on all situations related to your credit report and credit scores.  There really is no such thing as a HOPEless situation! Please feel free to give us a call with any questions you may have at 704-499-9696.  We hope to hear from you soon!

The 5 Fastest Ways to Damage Your Credit
By Michelle Black

Let’s face it, the world of credit can be confusing and overwhelming.  Learning how to achieve and maintain a healthy credit score takes a lot of studying and usually some professional assistance.  With 3 different credit bureaus (all of who work for your creditors, not for you!) having 3 completely different credit scoring systems it is easy to feel like you will never understand how to navigate your way through the credit maze.

However, there is some good news.  There are common factors that will cause your credit scores to increase with all 3 credit bureaus.  There are also common factors or actions which will cause your credit scores to decrease with all 3 credit bureaus.  Today, we will discuss 5 of the common factors which will cause your credit scores to decrease, or 5 of the fastest ways to lower your credit scores.  (Stay tuned later this week for 5 common factors which will cause your credit scores to increase!)

1.  Making late payments on current credit.
Did you know that 35% of your credit score is based upon your payment history!? In fact, payment history actually makes up the largest portion of your credit score.  Therefore, making a late payment on a current account (i.e. credit card, student loan, car payment, mortgage payment, etc.) is by far the very quickest way to see a dramatic decrease in your credit score.
2.  New collection accounts.
If a new collection account such as a medical bill, unpaid utility bill, cell phone bill, or any other negative account appears on your credit report you are very likely to see a sharp decrease in your credit scores with all 3 bureaus.  Collection accounts all affect your credit report negatively; however, a NEW collection account has more impact upon your credit scores than an old collection account.
3.  Higher credit card balances.
This tricky factor often surprises many of our members.  Since 30% of your credit score is determined by the amounts you owe on your credit accounts then having a high credit card balance, especially if it is over 50% of the credit card limit, can significantly lower your credit scores even if you are making your monthly payments on time.  So, if you have a $200 Target charge card and you spend $150 on the account you have likely lowered your credit scores with all 3 of the credit bureaus.  Luckily, this problem has an easy solution.  When you pay off your credit card you should regain the points lost due to the higher balance.
4.  Opening an excessive amount of new credit.
15% of your credit score is determined by the age of your open credit accounts.  While it is important to have enough open credit accounts on your credit report it is also true that opening too many new accounts can lower your credit scores, at least temporarily.  It is recommended that you consult with a credit specialist or professional before opening new accounts, especially if you are planning to make a major purchase such as a home in the near future.
5.  Applying for an excessive amount of credit.
Number 5 goes hand in hand with number 4, but there is an important difference to point out.  The simple act of applying for too much credit can lower your credit scores even if you are turned down for the new accounts.  The fact is that every time your credit is pulled for a new credit application you lose an average of 1-3 points (depending upon the credit bureau) and you will  typically not recover these p0ints for 3-6 months.  Now, 1-3 points per credit pull may sound like a small amount to you, but if you apply for 10 new accounts in a month you could be losing up to 30 points from your credit score! So, the next time you are in your favorite department store and someone offers you a 15% discount “just for applying for our credit card today” your best bet is to offer the sales clerk a polite “no thank you.”

Don’t forget to check back for part 2 of this blog series later this week.  Today we discussed 5 of the most common actions you want to avoid in order to prevent your credit scores from dropping.  Later this week we will discuss some common ways to help achieve healthier credit!

If you or someone you know is in need of professional credit advice or assistance, please take the time to consider the credit specialists at HOPE.  We would love the opportunity to answer your questions and offer our unique expertise on all situations related to your credit report and credit scores.  Remember, there truly is no such thing as a HOPEless situation! Please feel free to give us a call with any questions you may have at 704-499-9696.

Credit Cards – What Is the “Magic” Number?
By Michelle Black

Have you been thumbing through your stack of credit cards lately and wondered, “do I have too many?”  This is one of the most common credit questions I receive, so I thought I would share a little bit of insight into the matter.

The answer to the “how many credit cards should I have?” question is not necessarily the same for every person. As a general rule of thumb, it is advisable to have 3-6 open credit cards on your credit report. So, I can very easily advise that if you have less than 3 credit cards, you need more.  That being said, if you have more than 6 credit cards open right now I am NOT advising that you immediately close any accounts.  It is very important to have some professional guidance when and if you decide to close existing credit card accounts.  Closing the wrong account can potentially cause your scores to drop significantly.

If you already have 3 or more open credit card accounts is much more important to focus on your credit card balances rather than the actual number of credit card accounts you have.  Did you know that if you have a credit card with a balance that is over 50% of your credit limit then your credit scores will be lowered even if you are paying your bill on time every month?!?! This means that if you have a credit card with a $500 limit and you charge more than $250 on the card then your credit scores are affected negatively.  Your best bet is to keep all of your credit cards paid off to a zero balance.  (HOPE members have access to our “Snow Ball Effect” debt pay off plan to help begin eliminating credit card balances during their membership.)  By keeping your credit card balances at zero you also get to avoid paying those pesky interest fees and, therefore, save yourself some money!

Another fact about your credit card accounts that you should be aware of is how extremely important it is to make sure that your credit card is paid on time every single month.  Since 35% of our credit score is determined by our payment history it is easy to see how one single late payment can cause a huge drop in our scores.  In fact, I have seen a credit score drop as much as 100 points due to a single late payment on a credit card account!  Keeping your credit card balances at zero gives you further insurance against late payments as well.

We at HOPE would like to thank those of you who participated in our Facebook credit poll last week which asked the question “How many credit cards should I have open?” If you are not already a fan of our HOPE Facebook page we want to invite you to follow us on Facebook and/or Twitter for access to HOPE’s latest credit tips, special offers, and giveaways! Congratulations to Jill Lowe who won our credit poll contest last week and will be receiving a free professional credit analysis with a HOPE credit specialist!

If you have questions or need credit related advice, please feel free to give us a call at 704-499-9696.  Our friendly staff is waiting to hear from you and will be happy to help.

Nothing in the world makes our HOPE staff happier than when our members graduate from our program with clean, healthy credit and then go on to become happy home owners! We are so proud of our staff and our members for all of their hard work and dedication. Check out this recent testimonial from 2 HOPE members:

“Hello I hope you all are doing well. Just wanted to say thank you for all your help and support. Because of you all our credit is great and we purchased our dream home in November! Not just a home but our dream home.”
~Wendy and Andre

Do you find yourself in a situation where you are not able to do the things you need to do or purchase the home or vehicle you desire due to credit issues? If so, then you owe it to yourself to research the valuable services which the HOPE Program has to offer.  In fact, you can call us today to schedule your no-obligation credit analysis with a HOPE credit specialist to learn what our customized plan would be to help you work towards the healthy credit you deserve to have! What do you have to lose? HOPE’s no-obligation, professional credit analysis is very inexpensive ($30 for individuals/$40 for couples), takes just 30 minutes, can be done in person or over the phone, and will give you valuable insights into how to improve your personal credit scores! Call 704-499-9696 today to schedule an appointment or to ask any questions you may have. We cannot wait to hear from you!