Welcome back to the Secure Planning Strategies weekly blog and I cannot wait to discuss this week’s topic, which is one’s individual credit profile.
If you possess a credit card, a car loan, or student loans, chances are that you have a credit profile (some may call it a credit report). There are three main credit agencies (Experian, Tans Union, and Equifax) that rate your profile to assess how credit worthy you are as an applicant. The higher the credit score, the lower the risk that you will either make late payments or will default on your loans. The lower the credit score, the higher amount of money you will pay because you are considered a greater risk on loan default. Credit scores are fluid, which means that they will go up and down but there are steps you can take to improve your credit profile and keep it there.
First, obtain a copy of your credit report. You are allowed one free credit report every year and the best place to obtain your credit is www.annualcreditreport.com. It’s free and the safest place to get your information. If there are any inaccurate entries on your credit, you can go directly to all credit agencies to dispute the information.
Second, if there are collections on your credit that have been unpaid, it is important to understand the reason for the credit clean-up. For example, if you are looking to obtain a mortgage, it is best to refer to the lender because paying off the collection will update the collection entry on the report, which will negatively affect the credit score and profile.
Third, pay your bills on time. Late payments get reported on the credit profiles and will plummet your score very fast. Also, in most cases, interest and late fees will be added to the balance so it is very wise to not make a late payment.
Lastly, focus on paying down credit cards. If you pay your credit card off every month, it is best to make sure that the credit card company receives your payment one business day before the statement date. Although it is understandable to pay off the amount every month, the balance on the statement date will be reported on the credit profile. The agencies do not know if you are going to pay off the balance every month so it is best to pay off your balance before the statement date.
We, at Secure Planning Strategies, are here to see you financially succeed. Your credit profile dictates how much you will pay to borrow on credit. Remember, the higher the credit score, the less it will cost you, which means that you will have more money to plan for your retirement. Please know that we are never more than a phone call away and we care about you and your situation. If you don’t want to wait for the next week’s blog article and you want to get started today, please give us a call at: (248) 827-2580 or e-mail us at: info@spsfinancial.com.
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