Teaching Your Clients About Credit

Whether you are in the business of selling, financing or borrowing, you understand the struggles that come with clients that suffer from less-than-qualifying credit scores. Not only does it make your job more difficult, but nobody likes to turn a client away because of a low credit score. Unfortunately, your options become limited when it comes to low credit scores and leads that find themselves in situations they simply can’t get themselves out of on their own.

While every person’s situation requires a different action plan, there are key principals, that once understood, can be used to help build and maintain higher credit scores. Repairing a poor credit score can require a lot of work and in some situations, a lot of money as well. A credit score is like a fingerprint; there are no two that are alike and they are unique to each individual. Although all credit scores are unique they are also all made of the same components and result in good scores when those components are managed responsibly. Here are few things you can share with your clients that they may or may not be aware of:

  • Understand your credit limit. Just because you have a limit of $15,000 doesn’t mean you should be using all of it. Once you understand how your credit score is calculated and why credit is used, you’ll quickly gain a greater respect for the funds that are available to you.
  • Know the difference between types of credit. Learning the difference between revolving credit and installments will help to improve your score dramatically. Each of these types of credit account for different portions of your overall score. Once you understand how they work, your view of managing your credit will most likely change significantly. For example, in general, people don’t understand credit well enough to know that having credit cards is actually a good thing. In fact, having a score in the high 700’s is almost impossible without having some credit cards. That being said, using a credit card responsibly is the other secret to this equation. If you’re spending money you don’t have, this will indeed hurt your credit score. Learning how to spend with credit cards and managing your budget is a key factor in your credit score.
  • Late payments will result in huge decreases in your score. We simply can’t stress the importance of paying on time enough. Late payments are one of the biggest variables that bring credit scores down, not to mention they give creditors an excuse to hike up your interest rates, costing you hundreds if not thousands of dollars more in interest. The other kicker with late payments is, the higher your score is, the more points you will lose from a late payment.
  • You are probably missing out on easy points somewhere. There are so many factors that seem almost counterintuitive when it comes to credit and unfortunately, you just have to know where to find those extra points. Every credit file is different, so those extra points will be different for everyone. If you are working with an honest and reputable credit repair company, they will help you find these extra points outside of simply disputing items on your credit report.
  • Credit history is your best friend. Say you have a Sears credit card you opened 16 years ago, but you never use it. Logically, it would make sense to cancel it, right? WRONG! If you find yourself with too many credit accounts or accounts that you simply don’t use, consult with a credit repair specialist to help you determine the best course of action to improve your score. In many cases, cancelling an account you have had for years can cause your credit score to take a huge and unnecessary hit.

Understanding how credit works is just the beginning to establishing or improving a credit score. These tips are great first steps towards establishing and building credit. Our goal at Tru Path Credit is to help your clients qualify quickly by repairing their credit and to also educate them along the way. Building relationships and providing exceptional customer service is how our businesses grow. Let us show you how we can help your business grow at no cost to you.

Late Payments Happen.

What To Do If You Miss a Payment.

If you have ever had a late payment, you probably have a good understanding of what it can do to your credit score. In many cases, a late payment can be extremely detrimental to your credit. In fact, the better your score is, the more your credit score will be affected by a late payment. Regardless of the reason you have a late payment, there are several things you can do to help ease some or all of the pain and heartache of this mistake. Use these helpful tips to make the best decisions possible after a late payment.

Don’t Ignore It.

If you have a late payment, ignoring it is the last thing you should ever do. Understand that the longer the payment goes unpaid, the more your score is going to suffer. The best thing you can do if you have missed a payment is to pay it as soon as possible. If you don’t have the money that you need to make the payment, calling your creditor and explaining the situation is a much better alternative than ignoring it because you don’t have the funds. Sometimes creditors are willing to setup alternative payment plans or in some cases even delay a payment. You’ll never know unless you make the call.

Call Ahead of Time.

If you foresee not being able to make a payment that is coming up, the best thing to do is to call your creditor before the balance is due and explain your situation. Understand that doing this may require several phone calls and some extra work on your part, but it will most likely be worth it in the long-run. Creditors are going to prefer a heads-up, and will most likely be more lenient and forgiving if you let them know before the balance is past due.

Your Score Suffers More the Longer You Wait.

Understand that a 30, 60, 90 and 150 day late payments all affect your score differently. Obviously, the further past due you are, the more your score is going to suffer. There is a point where late payments turn into collections and even judgments which become much bigger problems. Not only will a judgement affect your score more than a late payment, but it will also take longer to be removed from your credit report.

Use Your Good History to Your Advantage.

If you happen to have an accidental late payment, but you have never had one in the past, calling your creditor and asking forgiveness should be at the top of your list. It is rare that a creditor will report a late payment before it is 30 days late, but it never hurts to make a phone call and explain the situation before it potentially gets worse. Most of the time, if you have a great history with your creditor, it won’t be a problem getting that blip removed from your account history.

Prioritize Your Late Payments.

​If you know that a late payment is going to occur, simply because there isn’t enough money coming in, learn how to prioritize which items get paid first and last. For example, a late payment on your house or car is going to have an extremely different affect on your score than a power or cable bill.

Avoid a Late Payment in the Future.

The late payments that affect your score the most are the ones that are the most recent. That being said, taking all necessary precautions to avoid future late payments should be your top priority. If this requires setting up alarms, auto-pay or calendar reminders, by all means, take the time to do so.

If you are suffering from a poor credit score, due to late payments or for any other reason, give us a call at 385-419-0878 and see how we can help you! Learn how simple it is to get started improving your credit score while getting a credit education along the way that you won’t find anywhere else.