If you simply don’t have a credit scores because you have little experience or history with credit, you likely have a thin credit file. That means you have (if any) credit accounts listed on your credit reports, typically one to four. The file means a bank or lender is unable to calculate a credit score because there is not enough information in a user credit history to do so.
In order to build or thicken the credit file, you can apply for a secured credit card, becoming an authorized user on someone else’s credit card or taking out a credit building loan.
Your credit score- a three digit number lenders use to help decide how likely it is they’ll be repaid on time if they grant you a credit card or loan. It’s is an important factor in your financial life especially for your future.
The higher the scores, the better it is for you to qualify for loans and credit cards which will help you to save money.
With the video shown above, Mr. Annakie Jr break down how you can help and build your credit and how you can manage your credit consistently.
If your credit history is not where you want it, no worries! Improving your credit scores does take sometime, but the sooner you take a lead on addressing the issue, the faster your credit scores will increase.
You can build your credit by taking several steps like: establishing a track record of paying your bills on time consistently, knowing your credit history, limit your inquiries, knowing your statement dates and understanding your credit utilization as Mr. Annakie Jr shared his knowledge and understanding of what was taught by his father David Annakie Sr founder of USA Credit Repair Inc and his 15 years old credit repair company.
He journeyed us by focusing on how important building your credit is. When you actually have an understanding of what your scores are, you will also get information about which factors are affecting your scores the most.
These risk factors will help you understand the changes you can make to start improving your scores. You will need to allow sometimes for many changes you make to be reported by the creditors and subsequently reflected in your credit scores.
Of course, certain credit score factors are typically more important than others. Has Mr. Annakie Jr states that payment history and credit utilization are among the most important in many critical credit scoring model.
Pay your bills on time
In the video, it was clear that when lenders review your credit report and request a credit score of you they’re very interested in how reliable you pay your bills. That is because your past payments performance is usually considered a good predictor of future performances. Therefore, paying late or settling an account for less than what your originally agreed to pay can negatively affect credit scores.
Credit Utilization Ratio
As he goes deeper into understanding credit, he turned his focus on credit utilization ratio by letting us know that it is an another important thing in credit.
The ratio is calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit.
For example, if you typically charge about $300.00 each month and your total credit limit across all credit is $3000.00, then your utilization is 30%.
Always ensure that the percentage is under 10%.
Mr. Annakie Jr. also highlights that one should not apply for too much new credit, resulting in multiple inquiries.
Opening a new credit can increase your overall credit limit, but the act of applying for credit creates ahard inquiryon your report. Too many hard inquiries can negatively impact report credit scores and can affect your credit for up to 2 years or more.
Monitoring your credit
He closes off on how you can monitor your credit. Many might think checking credit consistently will lower your scores. Well that’s quiet not so. You can use sites where you can check your scores absolutely free and get full access of your reports in detail online like with Experian or you can become a member with a credit monitoring agency by subscribing with making a monthly payment depending on the agency. The membership credit agencies for most times allow you to get more up-to-date information on your credit history and give you full access.