Improving Your Credit Score

My primary job for almost 10 years in Corporate America was financial counseling.  Through the years of working with families, it became abundantly clear to me that no matter the age or income, if you were never taught how to manage money, budget, obtain credit, then you simply never learn.  I want to take an opportunity to share with you a few tips on how to manage your credit score.

First things first, why is it important?  Being a good steward of what the Lord has given us furthers our witness for him.  Also, poor money and credit management has long-term affects. Many young college students have ruined their credit early in life, not realizing its significance.  Did you realize that your credit score can impact your future employment?  Many employers pull CBRs (credit bureau reports) to determine a potential employee’s integrity.  Homeownership (or the lack thereof) is significantly impacted by one’s credit history.  Certain employers require “bonding” which is specific to the financial field — but again, cannot happen with poor credit history.  These are just a few of the many, many reasons why understanding and maintaing your credit is crucial.

• Too many credit checks, also known as inquiries, negatively impacts your score.  When shopping for a car, house, or credit card, it is important that you do not allow excessive numbers of pulls on your report.  Less is best.

• Keep credit card usage to 45% or less of your current credit line.  For example, if your credit limit with Macy’s is $1,000, do not exceed $450 as a balance.

• Unpaid medical bills DO affect your credit score.  It is a common misconception that you can skip out on your doctor’s office or hospital bill and it has no affect on your credit.  Medical institutions frequently turn over your balance to collections agencies and most DO report your delinquency.

• After a few years, this unpaid credit card will “fall off” my credit history. Wrong.  I have heard frequently that customers think that after 5 or so years of non-payment, the $5000 balance on that old Visa card will magically disappear.  It doesn’t.  It must be paid or it will linger.  It is true that after a period of time, creditors will accept less on the balance.  However, avoid settling if at all possible.  This affects your credit too (but is still better than completely ignoring it).

Jennifer Maggio is an award-winning author and speaker who is considered one of the nation’s leading authorities on single parents’ and women’s issues. She is founder of The Life of a Single Mom Ministries and Overwhelmed: The Single Moms Magazine. For more information, visit http://www.thelifeofasinglemom.com.