How to Manage Your Credit and Improve Your Credit Scores

As a credit expert and funding expert with years of experience in the industry, I've seen first hand how crucial it is to have a strong credit profile. It can determine your ability to buy a house, finance a car, or start a business. And let's face it, having good credit just feels good. In this blog post, I want to share with you some guidelines on how to manage your credit and improve your credit scores. By following these rules, you can start building a stronger credit profile and achieve your financial goals with confidence.

Payment History and Utilization Amounts Owed

Payment history and utilization amounts owed are the two factors that have the biggest impact on your credit score. I can't stress enough how important it is to make your payments on time. One late payment can damage your credit score for years. And when it comes to utilization, I recommend keeping your balances under 30% when seeking financing and under 50% otherwise. This is what I call the 30-50 rule. By managing these two factors, you can lay a solid foundation for a strong credit profile.

Credit Length and Diversity

Credit length and diversity are the next two factors that have a significant impact on your credit score. It's important to keep accounts open for as long as possible and have a mix of credit types. This means having a variety of credit accounts, including negative accounts that can be removed, to show lenders that you can handle different types of credit. And remember, credit cards are pivotal in building a strong credit profile. Don't believe the myth that cutting up your credit cards will lead to a good credit score. It won't.

Managing credit card balances

Managing credit card balances is also important. The first rule is the thirty-fifty move, which means keeping your balances below 30% of the available limit when seeking financing and up to 50% otherwise. This shows lenders that you can manage high balances and pay them down. The third rule is obtainable utilization, which recommends requesting a limit increase every six months to help manage high balances. By following these rules, you can maintain healthy credit card balances and increase your credit limits over time.

Diversifying Your Credit Profile

Diversifying your credit profile is also crucial. Negative accounts, such as collections and charge-offs, are still considered types of credit and can impact your credit score when removed. And the last credit factor to consider is new credit or inquiries. I recommend not having more than six inquiries per bureau within a six-month period and not opening more than three accounts within the same time frame. Don't let car salespeople or other lenders pull multiple credit reports, causing unnecessary inquiries that can lower your credit score.

Conclusion

Managing your credit can be overwhelming, but it's essential to achieving your financial goals. By following these guidelines and managing your credit wisely, you can build a strong credit profile and achieve financial success. At Broker Solution, we offer comprehensive training on credit management and much more. Contact us today to learn more about how we can help you achieve your financial goals with confidence. Don't let bad credit hold you back. Take control of your credit today!

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