My guide on improving credit score

My own guide on improving credit scores
Hi i wrote my own little guide on improving credit scores. I hope you can give me some feedback and what i should add to it . I wrote this in another forum as my other persona howtofreetravel .

It is very important to have a good credit rating. If you want to rent an apartment, find employment, apply for a credit card, be approved for a loan or mortgage or even get a private student loan you need a good credit rating. Improving your credit score is vital. Here are some tips to help you in your quest to become credit worthy.

Credit card companies rate you according to your balance, usage, and payment history. Spend as much as you want on a credit card, but pay the bill (PIF) before you even get the actual bill. Keep your charges to around 1% to 9% of your credit limit. For example, a $5000 credit line should only report a balance of $50 to $450. If you only carry one credit card, keep the payments current by PIF. If you carry more then one credit card . Pay off the other cards completely before the end of the billing cycle.. and keep one card with a balance of $50 to $450 As a fun note, using an AMEX Platinum, gold (charge cards) do not count against you in the credit rating system.

The age of your accounts is very important. Lenders will frown on you if you have a record of regularly opening and closing credit cards. Keep credit cards open as long as you can. It is wise, however to change from a card with a yearly fee to a non-yearly fee card or you can also ask for a refund on the fees. Look into AMEX cards. If you have a card that is 10 years old and get a different type of AMEX account, AMEX will backdate all cards. Backdating helps increase your credit rating as the new card will receive the age of the old amex cards

Keeping cards for a long time also increases your credit score. Having a credit card from one major bank often gives you a heads-up when applying for a card from another bank. Do be aware, however, that you still need to keep payments current on all cards.

A line of credit on the card affects your credit rating. Some cards, like AMEX, allow you to apply for 3x your credit line (with a soft pull). An increase in credit limits will improve your rating.

If you are continually applying for new credit cards, your credit will suffer. Credit does rebound after several months, but it causes lenders to think twice before lending you money. Too many inquiries will hurt your chances for instant approvals. Only worry about this when you have over 8 hard inquiries.

Do note that if you miss payments or are continually late you will hurt your credit rating. Do what you can to pay back your card before the bill arrives at your doorstep. Check your credit rating, at least once a year, to find any mistakes.

Using these tips will keep your credit rating in a 720+ range. Only apply for credit cards that have good point bonuses if you have a good credit score. Being rejected for a credit card jeopardizes your chances of receiving additional credit.

 

I respectfully disagree on these two points. You don't need a good credit rating / score (at least in the US) for these. To rent an apartment all you need to do is just to prove you either have a stable job or money in your checking account. And I've never heard that any potential employer would care / ask about your credit score. I don't think it's even legal.

 

In the UK at least credit scores are becoming more important when getting a job. I had a credit check request a couple of months ago from a potential employer. There have been a small number of press articles appearing about this phenomenon.

I know that it's controversial but good credit scores are usually a decent proxy for a lot of the attitudes that employers want, conscientiousness, ability to keep a number of balls in the air, the ability not to take too much on and keeping a employed and in a relationship. I know that it's not perfect (presumably a person who didn't borrow anything would be a good rather than bad employee, but the credit score would be awful).

 

Probably UK specific, but get on the electoral roll at your current address. Absence from the electoral roll is a big red flag.

 

They can't do the same kind of check a credit card company can do, for example. Whether it's a potential employer or a landlord/agent, they can only check publicly available information - bankruptcies and CCJs, which is more or less useless. They can't see defaults, which can be a lot more telling about an individual's credit-worthiness.

 

I was definitely asked to provide information that would let them check my credit history, but that may not have covered defaults.

 

@qwikad.com, it is a mixed bag here in the U.S. Many employers routinely do intensive credit checks (along with criminal checks, of course) for employees in position of trust or who have authority over large sums of company money. A few years ago, I took a position that involved my receiving large sums of money for sales and marketing operations, and they did an intensive background check which included visiting local courthouses for not only criminal activity, but civil, as well. They also did a very deep credit check. As a senior executive who would have a lot of discretion for spending a lot of money on their behalf, they wanted to be sure that I handled my own money correctly and, while it was a bit strange, I had difficulty arguing their logic. This type of pre-employment screening has been going on for many decades. What has changed, recently, is a tendency for some employers to do credit checks on employees that may not be in positions of trust or handling money. That is where it is a more gray area and some legislators have indicated a desire to prevent this type of privacy invasion, unless it is pertinent to the job. There may have been laws passed in certain states forbidding this level of invasion of privacy, but I do not think that it is prevalent, yet.

Of course, then there is the government. Many years ago, a sales lady that worked for me put herself through law school and won an entry level legal position in the U.S. Attorney's office in her state. I got a call from an FBI agent, as a former employer, who was doing the background investigation. He asked a lot of probing questions about her activities, demeanor, patriotism, economic situation, etc. I did not have answers for many of his questions, but I am sure that he compiled a detailed profile on her as the result of many such interviews. I suspect that, at this level of screening, he had easy access to all of her financial information.

 

As I've found out this practice is illegal in at least 10 US states and many other states (something like 20+) are currently considering passing similar laws.

 

Seems like you are promoting Amex more..
Nevertheless I Thank you for bringing out the effort.

 

Let's be real some companies are going to do it legal or not

 

I've had employers run my credit prior to employment. This is done especially when the type of work you are doing involves finance. Now I don't believe they can legally turn you down for employment based on a bad credit score but it can subconsciously cause them to pass on you.

As for apartments... I think every legit Apartment complex runs your credit and has the right to set a minimum. Years ago I moved to a place that required you to have over a 700 score through Transunion and make at least $52k/year.

 

You should get yourself familiar with this legislation: ncsl.org/research/financial-services-and-commerce/use-of-credit-info-in-employ-2013-legis.aspx

Who knows, maybe you can go back and sue that employer for illegal practices. It does differ from state to state, of course, but it seems like most states prohibit those practices, irregardless of what position you're seeking.

 

I think that it's fairly clear that credit scores do matter for jobs and appartments, whatever the legal situation.

 

I think you completely missed the point. They can't say "I am not hiring you because you have bad credit" but they surely can think it. And once it's in someones head they can find one of the 85 other billion reasons to pass on you.

It's like race and age. I can't tell you I'm not hiring you because you are 70 and black but surely that can be the reason why.

If you are in charge of Financial Accounts EXPECT your credit to be checked. It's part of the background check.