Page 22 - Means Wealth 2020/2021 Perspectives

CREDIT SCORES AND YOU

f you are experiencing problems getting loans, credit cards or decent
I interest rates, you should look at trying to improve your credit score.
A low score could be the reason you are having difficulty.

There are steps you can take to address certain items that may be weighing
on your score. This process might take a while, but it is worth the time and
effort. Let’s take a look at some helpful suggestions.
1. Review the accuracy of your three major credit reports. These reports
are provided by Equifax, Experian and TransUnion. Each bureau
generates its own credit report and score based on your credit history.
Credit information may not be reported accurately across all bureaus,
therefore, it is a good idea to examine these reports thoroughly as
there could be mistakes you would want to correct.
2. Focus on the areas that need improvement. The following are the
factors that determine the strength of your credit score:
a. A history of late payments. This factor represents ~35% of
your score.
b. Your debt load. This accounts for ~30% of your score.
c. Age of outstanding accounts. This is where creditors look
for a history of borrowing, utilizing and repaying credit. This
comprises ~15% of your score.
d. Account types. Lenders want to see how well you handle
both installment and revolving credit. This represents ~10% of
your score.
e. Application history. If you have many hard inquires on your
credit, it could appear you are in financial hardship, which
would lower your score. This accounts for ~10% of your score.
3. Make all debt payments on time. Repeated delinquent payments will
adversely affect your score.
4. Clear outstanding debt. Contact your credit bureaus when you have
fully repaid your debt. This action should raise your credit score.
5. Apply for a secured credit card. A secured credit card uses funds
you have placed into an account to secure the line of credit you are
seeking. Your credit card payments come directly from this account,
ensuring you have no delinquent payments. Your credit scores should
rise as your payments are consistently made on time.

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