6 Ways To Raise Credit Scores After College.
Unfortunately, most of us don’t become really financially accountable until after college.
Student loans are now requesting payments at the worst time—you’re living from paycheck to paycheck, or you are trying to start your own company…
Or just unemployed, and you want to raise your credit scores…
But fear not, below are ways to raise your credit scores while adapting to the new ”real world”…
1. Request your credit report
First thing, go to AnnualCreditReport.com and request a credit report from each of the three big nationwide credit reporting companies:
By law, you’re entitled to one free report every 12 months. When you request it, be ready to print it or save it to your computer.
Once you have the report, examine everything. In particular, look for any accounts that show late payments or unpaid bills. If that information is inaccurate, the report should tell you where to send a dispute.
You may also want to sign up for a free account with Credit Sesame, which will give you an idea of how your reports are shaping your credit scores. You’ll also get to see your VantageScore from TransUnion, one of the three big credit reporting companies.
2. Practice preventative care.
Use debt wisely. If you are unsure that you can pay off that credit charge in 3 weeks or less, don’t use credit. Also, what matters is the percentage of how much credit you have available versus how much you use each month. Keep it under 30 percent and your score will stay healthy and on the rise.
Fig.1: Chart illustrates what currently impacts your credit score
Next, know that there are 6 different metrics used to determine an excellent credit profile or high credit scores, see these metrics below:
- Credit Card Utilization: Again, only use 30 percent of your credit cards and your score will stay healthy and on the rise.
- Payment History: Pay your credit cards in full amount–one week before due date, or at least on time, every month. And if you have Installment Loans, pay this on time every month. Keep credit cards open while charging small amounts and paying amounts in full every month, to continue building credit/payment history, this will raise credit scores.
- Derogatory Marks: Prevent collections and late payments, and if you do get these on your credit report – you can have derogatory marks professionally removed within only months by a reputable company, or you can repair your own credit with a Credit Repair Kit.
- Age Of Credit: Continue to pay Credit Cards and Installment Loans on time (before due dates) to establish credit, companies like to see that you can manage credit, so keep your credit cards open but you don’t always have to charge on them! It is better to keep credit cards open than to close them because the older the credit account will equal a higher credit score if credit accounts are paid on time and credit utilization is lower than 30%, see Chart below for an example to better understand:
|Credit score||Average age of credit accounts|
|650-699 (Fair credit)||7 years|
|750-850 (Excellent credit)||11 years|
- Total Accounts: The more credit you can manage, the more money Lenders will trust you to borrow.
How many open credit cards and/or loans you should have really depends on your goals.
Be real with yourself, and only take on the amount of credit that you can carefully manage, to establish a trust-worthy credit profile.
For example, if you are thinking of attaining a perfect credit score, 850, you will need to have at least 21 open credit lines, all paid in full and on time with a credit utilization of less than 30%.
But know that any score over 740 will give you the same privileges as an 850 credit score, such as best interest rates on purchases like credit cards, mortgages, and car loan.
You can easily achieve a score over 740 with a mortgage, car loan, and three to five credit cards ( 6 to 7 open credit lines ), but make sure to keep these credit lines paid off in full, paid on time with 30% or less credit utilization, every month.
For best practices, only open 2 credit lines every year, again you only need 6 to 7 credit lines in good standing to achieve a credit score over 740.
- Credit Inquiries: There are Soft Inquiries and Hard Inquiries, Soft Inquiries will not hurt your credit.
On the other hand, Hard Inquiries can lower your credit scores. Hard inquiries on your credit are the kind that happen when you apply for a loan or credit card — can stay on your credit report for about 24 months.
Multiple hard inquiries can put a serious dent in your credit, particularly if you are new to credit.
If a hard inquiry on your credit report is inaccurate, you can dispute it with a company that has FICO professionals ready to help you clean your credit report, same as you would dispute any other derogatory marks (collections, late payments, etc.) on your credit report.
Now that you know the metrics that determine ”great credit”, you can move on to building ”great credit” for yourself after graduating from college.
3. Build Credit
Keeping a clean credit report isn’t only important for your credit score. It can also affect your job prospects.
Some employers pull credit reports before making hiring decisions.
Secured Credit Cards: Get a secured credit card. A Secured Credit Card requires a small cash deposit ($300 or $500 minimum) upfront, which then becomes your credit limit.
You can apply for Secured Credit Cards with little or no credit to begin with. Make small regular purchases and pay it off in full, every month. As you use it, Creditors might reward you and up the limit without making you pay.
Just be aware of interest rates, interest rates can be high for people starting with little to no credit. Here’s a list of secured credit card issuers:
Gas and/or Retail Store Card: It’s way easy to get an Old Navy credit card, simply buy some flip flops and the Cashier will be begging you to open an Old Navy Store car.
Just make sure to pay it off in full, and on time, every month.
Authorized User Tradelines: Ask your parents to add you to their credit card account. They don’t have to give you a card, but you’ll get credited when they pay the balance.
Just make sure that you have parents with great credit. Another way to be added as an Authorized User is by using companies that offer this service, such as CreditPro Studio.
CreditPro Studio’s E-Book called ”Personal Credit Builder” can be downloaded here, this service uses Authorized User Tradelines to drastically raise credit scores at around 100 points or more. This is the fastest way to build credit.
4. Leave Accounts Open
Even if your card has a zero balance, closing it can still hurt your credit score because credit history length makes up 15% of your credit score.
Credit history length factors in the age of your oldest account and most recent account as well as the average age of all accounts.
In general, the longer you keep accounts open, the more your credit score will increase.
5. Refinance your student loans.
Take out personal loans from companies like SoFi and Upstart, and use them to make student loan payments.
They offer loans at lower interest rates than traditional lenders. And, it would be wise to create a monthly expense budget that can be followed to manage cash flow and establish good credit.
If you have missed so many Student Loan payments, that you are now in deep debt—it would be highly advised to forget paying, and hire a professional that will help you clean up the damage to your credit report from student loans.
6. Get Professional Help
If you are overwhelmed by your credit situation or monthly expenses, you live paycheck to paycheck, or are confronting bankruptcy, consumer credit counseling agencies are available to assist you. Of course, the key is to find a reputable one.
Locate a credit counselor using the search feature of the U.S. Trustee Program offered through the U.S. Department of Justice.
A reputable company with certified credit counselors can repair your credit report and raise credit scores, CreditPro Studio specializes in removing derogatory information from credit reports including bankruptcy.
You can also simply refer to your credit card billing statement for a phone number to call if you’re experiencing trouble making your payments, the key here would be communication with the Creditor to attain affordable payment arrangements.
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