Good news! Bad credit doesn't have to stay that way. Don’t worry if it’s in the dumps right now. That probably just means you’re not following a strategy for credit health. What’s great about credit strategy is, you don’t have to reinvent the wheel! With easy-to-implement simple methodology, you can increase your credit score in no time flat. It’s like taking care of a pet, watering a plant, or getting in shape — small, daily, focused actions can result in long-term health and improvement.
There are several ways to start improving your credit score so that it works in your favor (and not against you).
When credit bureaus determine an individual’s score, a big factor in the equation is payment history. Do you pay your invoices on time? Do you default more often than not? Do you have any bills in collections due to nonpayment? Roughly 35% of your FICO score is based on your ability to pay on your accounts in a timely fashion, so that’s the best place to begin: The better your payment history, the better your score.
Financing through the Credova platform can help you establish a consistent payment history. Each on-time payment is another step toward solidifying your score, and smaller purchases made via point-of-sale financing is a manageable approach.
Another thing to consider as you work on cleaning up your credit is the 30% rule. Take a look at your revolving lines of credit (your credit cards) and make sure your credit utilization (the balances on your cards) does not exceed 30% of total available credit. Therefore, if you can access $10,000 in credit in total on all of your cards, you should have a combined balance of $3,000 or less.
Those with the best credit scores often have utilization around 10%, so maintaining a low credit card balance can drastically improve your credit standing. If you aren’t one of those people, don’t worry. Half of American consumers are maxed out on their credit cards, so just start whittling away as best you can. Getting those balances down will make you a more attractive consumer to the credit bureaus.
Lastly, that dreaded 11-letter word: collections. Don’t ignore them and hope they’ll go away; deal with them! There’s nothing more damaging to a credit report than a delinquent collection account. Work with your creditors to establish a sustainable payoff plan and strongly dispute any collections accounts that shouldn’t be on your credit report. Even if you’re able to pay only a fraction of the balance each month, some movement is better than no movement at all.
If you are one of the estimated 70 million American consumers who have collections on your credit report, prioritize their removal. Ask your creditors if they will remove the negative mark on your credit if you pay in full or pay over time. Some will be willing to do exactly that. In any event, collections accounts fall off your credit report after seven years of delinquency — paid or not. If one is about to eclipse that seven-year mark, leave it alone and focus on paying off newer debt.
Aside from helpful advice, Credova can assist your credit-bolstering mission in other ways. Financing with us is considered a “soft credit inquiry,” which does not get reported to the credit agencies and doesn’t affect your score in any way. Opening a credit card, financing a car, and securing a bank loan are all hard inquiries, which ding your score.
Alternative financing gives consumers power through the ability to establish positive payment history, the ability to approve a purchase with no hard inquiry, and the ability to free up funds for smart financial decisions. Traditionally, good financing was enjoyed by only those with better credit scores. But Credova extends financing to a wider customer base, helping you to make the purchases you want and need.
See? It’s not all doom and gloom. Take a breath. Now take some action.
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