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Building A Good Credit Score: 5 Tips

Building A Good Credit Score: 5 Tips

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    Having a solid credit score has been important for quite a while now, but it’s actually becoming more important these days as lending tightens up. There’s a reason that the Fair Isaac Corporation — the organization that calculates the credit score that most major lenders rely on — has been changing the way that credit scores are calculated. All of these circumstances add up to the fact that even someone who is confident that their credit score is good should be making sure it stays that way. There are some relatively simple steps, though, that you can take to help yourself build up your credit score, as well as maintain it.

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    1. Get A Copy of Your Credit Report

    Although you can’t get your exact credit score for free, you can get a free copy of your credit report from each of the three credit bureaus (Experian, Equifax and TransUnion) once each year. To do so, visit AnnualCreditReport.com and request a report. AnnualCreditReport.com, by the way, is actually the only way to get your reports for free — the site was created in response to federal legislation requiring that the three national credit reporting companies inform consumers about their status. Despite their catchy commercials, companies like FreeCreditReport.com actually wind up charging you for expenses related to obtaining your credit report.

    2. Make Sure You’re Aware of Any Existing Accounts

    Typically, your credit report will show any accounts you have open — although different companies report to different credit bureaus, and some companies don’t seem to report at all. It’s easy to forget about credit accounts that you don’t actually use, like credit cards you stopped using but chose not to close the account ‘just in case.’ These credit accounts can easily represent the most likely upcoming dings to your credit: card companies and other lenders have started closing inactive accounts in order to limit their liability. As the amount of credit a person has goes down, so does their credit score. I’m not suggesting that you should start charging items to those inactive accounts, though — instead, it’s enough to be aware of them so that if your accounts do close, you won’t be taken by surprise.

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    3. Set Up Automatic Payments

    One of the easiest credit score factors you can control is how good you are about making payments on your current balances. Even if you don’t usually carry a balance, making a payment or two late can cause a preventable dip in your credit score. A simple slip up, like forgetting to send a payment, can have some major consequences. While FICO scores will be offering more leniency for someone who misses only one payment, automatic payments can be a simple way of avoiding even one late payment and any problem at all. Late and missed payments can have ripple affects beyond your actual credit score as well — in some cases, including credit cards, a missed payment on one account can lead to a higher interest rate on another account.

    4. Get Serious About Your Balances

    One of the factors in a good credit score is how much credit you have available. That means that reducing your current balances has a direct connection to helping your credit score. That doesn’t mean that you have to pay off your entire balance immediately to improve your credit score, though: while it’s a good overall goal, just adding a few dollars to your minimum monthly payment is enough to at least get you started on an upwards trend. Moving around debt, say to a zero-interest credit card, doesn’t actually help with your overall credit score. While it may make the amount easier to pay off, it can be reflected in your credit score as an inability to manage your existing credit.

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    5. Keep Your Number of Cards Constant

    While your available credit is a key factor in your credit score, opening a bunch of new credit cards just to increase the amount of credit you have available won’t really help. Instead, the system used to determine credit scores reads such a move as a need for more credit: if you open several cards in a short time span, credit reporting agencies assume that you plan to use that credit and might even be planning to get yourself into some trouble with it. Closing unused credit cards can also have a negative impact on your credit, so keeping your number of cards constant is usually the best compromise between getting the best credit card options and maintaining your good credit score. Your account age can also play into things, by the way. That first credit card you ever got, with its awful interest rate, may be an important part of your credit score. Think carefully before closing such an account.

    Your Credit Score and You

    Despite many ads to the contrary, there is really no way to fix your credit score in a hurry. The Fair Isaac Corporation works hard to make sure that credit scores indicate how you use credit over time, and the company knows what it’s doing. That means that you have to work on maintaining a good credit score long before you want to make a big purchase, like a house or a car. Since it’s not always predictable exactly when a person is going make those large purchases, it makes sense to make a good credit score an ongoing priority.

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    The Gentle Art of Saying No

    The Gentle Art of Saying No

    No!

    It’s a simple fact that you can never be productive if you take on too many commitments — you simply spread yourself too thin and will not be able to get anything done, at least not well or on time.

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    But requests for your time are coming in all the time — through phone, email, IM or in person. To stay productive, and minimize stress, you have to learn the Gentle Art of Saying No — an art that many people have problems with.

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    What’s so hard about saying no? Well, to start with, it can hurt, anger or disappoint the person you’re saying “no” to, and that’s not usually a fun task. Second, if you hope to work with that person in the future, you’ll want to continue to have a good relationship with that person, and saying “no” in the wrong way can jeopardize that.

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    But it doesn’t have to be difficult or hard on your relationship. Here are the Top 10 tips for learning the Gentle Art of Saying No:

    1. Value your time. Know your commitments, and how valuable your precious time is. Then, when someone asks you to dedicate some of your time to a new commitment, you’ll know that you simply cannot do it. And tell them that: “I just can’t right now … my plate is overloaded as it is.”
    2. Know your priorities. Even if you do have some extra time (which for many of us is rare), is this new commitment really the way you want to spend that time? For myself, I know that more commitments means less time with my wife and kids, who are more important to me than anything.
    3. Practice saying no. Practice makes perfect. Saying “no” as often as you can is a great way to get better at it and more comfortable with saying the word. And sometimes, repeating the word is the only way to get a message through to extremely persistent people. When they keep insisting, just keep saying no. Eventually, they’ll get the message.
    4. Don’t apologize. A common way to start out is “I’m sorry but …” as people think that it sounds more polite. While politeness is important, apologizing just makes it sound weaker. You need to be firm, and unapologetic about guarding your time.
    5. Stop being nice. Again, it’s important to be polite, but being nice by saying yes all the time only hurts you. When you make it easy for people to grab your time (or money), they will continue to do it. But if you erect a wall, they will look for easier targets. Show them that your time is well guarded by being firm and turning down as many requests (that are not on your top priority list) as possible.
    6. Say no to your boss. Sometimes we feel that we have to say yes to our boss — they’re our boss, right? And if we say “no” then we look like we can’t handle the work — at least, that’s the common reasoning. But in fact, it’s the opposite — explain to your boss that by taking on too many commitments, you are weakening your productivity and jeopardizing your existing commitments. If your boss insists that you take on the project, go over your project or task list and ask him/her to re-prioritize, explaining that there’s only so much you can take on at one time.
    7. Pre-empting. It’s often much easier to pre-empt requests than to say “no” to them after the request has been made. If you know that requests are likely to be made, perhaps in a meeting, just say to everyone as soon as you come into the meeting, “Look guys, just to let you know, my week is booked full with some urgent projects and I won’t be able to take on any new requests.”
    8. Get back to you. Instead of providing an answer then and there, it’s often better to tell the person you’ll give their request some thought and get back to them. This will allow you to give it some consideration, and check your commitments and priorities. Then, if you can’t take on the request, simply tell them: “After giving this some thought, and checking my commitments, I won’t be able to accommodate the request at this time.” At least you gave it some consideration.
    9. Maybe later. If this is an option that you’d like to keep open, instead of just shutting the door on the person, it’s often better to just say, “This sounds like an interesting opportunity, but I just don’t have the time at the moment. Perhaps you could check back with me in [give a time frame].” Next time, when they check back with you, you might have some free time on your hands.
    10. It’s not you, it’s me. This classic dating rejection can work in other situations. Don’t be insincere about it, though. Often the person or project is a good one, but it’s just not right for you, at least not at this time. Simply say so — you can compliment the idea, the project, the person, the organization … but say that it’s not the right fit, or it’s not what you’re looking for at this time. Only say this if it’s true — people can sense insincerity.

    Featured photo credit: Pexels via pexels.com

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