Know Your Score - Part VII

Younger people, under 30 usually, have a tougher time establishing and maintaining good credit scores. There are a number of reasons the biggest of course is not understanding what makes up a good or bad score. There isn't any reason why a young person can't have a great credit score and maintain it. 

Let's look at a few things you can do to make sure your scores are at the top. 

First of all don't apply for every credit card off that comes your way. Just because the mailer said "YOU'RE PRE-APPROVED" doesn't mean you are. The credit card companies buy list from the credit bureau's to target a specific group of people. In your case it might be all the people under 28 with a college degree and at least one student loan and scores above 640. You then get a "pre-approval" letter enticing you to fill it out. You do and send it in. The credit card company then actually pulls your credit report and see that you do have what they specified but now they see you have also applied for three other credit cards two department store cards and a car loan. And after three weeks of waiting for this new card you get the mail from that company only to say "We're sorry to in form you that your application has been denied due to information contained on your credit report" and then give you the info to contact the reporting agency.

Or maybe when you filled out the application and sent it in. The credit card company pulled your report and your score is now 628 instead of the 640 minimum score they were looking for. Once again credit denied.

This can be frustrating. You have a good job make good money and are responsible with your spending but unless it fits the criteria the creditor has established, you will probably be denied.  But how do you get credit established.

Make a plan. Understand how and why you need a credit card. And how may you need. I didn't say want. I said need. Too may time we have seen younger people with staggering debt. One client netted about $2200 per month. Here child care was $500 per mo. her car payment was 420 per mo. and because her parents were moving out of state (her free rent was going away) she was staring about $800 per mo. rent in the face. Oh by the way she also has about $15,000.00 in credit card debt that she was currently behind in. She didn't have enough left over each month to gas her car to get to work and feed and clothe herself and daughter. She is currently in a chapter 13 bankruptcy that will affect her credit for years to come. So when I say "how many cards do you need" that's what I mean. 

You have to be able to make your obligations each month with enough left over to be comfortable. I could write for a long time on budgets and sticking to it. 

Your first payment (I know you've heard this before) should be to yourself. Put something away in savings or investments first. First. I just wanted to make sure I said first. Then pay your other bills. Now you should have something left over for fun and entertainment. If there is now anything left this is what you can determine is available if you have any other debt. 

This is not to sermonize, but merely to make you aware that you have choices. And what you do now can affect you positively or negatively for a long time to come.

So you need to establish a few credit cards so you can manage your credit score. Two to three cards with 500 to 1,000 credit limits is sufficient. 

Pay the cards off each month. Never put more on all the cards combined that you can't payoff within three months. And never pay the cards until you've paid yourself. 

You're smart and want to be able to afford what you want and get the best rates and terms available. There is no reason you can't unless you've made a bad choice. And even past bad choices don't mean you're doomed. You can clean up past credit problems, even bankruptcies, credit counseling, charge-offs and collections and get back on the road to great credit a lot sooner than you may think.

Just be prudent with your money and protect your credit. It's a reflection of your good name.

Don Davis

Don Davis can be reached at 360-652-9994
or visit his web site at HTLNW.com HTLNW.com for other contact information.
Don specializes in residential and commercial lending mostly in and around Snohomish County, North King County, Skagit county and generally in the state of Washington.
Don has spoken at numerous workshops and events regarding credit scoring and related topics and has helped many people substantially raise their individual credit rating.
If you want to maintain a high credit score or wish to increase and maintain a high score, contact Don to schedule a meeting today.