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.