First thing to know about credit scores is that there are NO “quick fixes.” Be leery of advice that tells you otherwise because those tips can easily backfire just as quickly. There are three key factors that can help boost a low credit score. These three little, but effective, measures include:

1)      Low balances—the balance of your various credit cards or line of credit account for 30% of your calculated score. Keep those balances low, even if they’re spread out among multiple cards, is better than one large balance on a single credit account.

2)      Make your payments on time – your payment history accounts for 35% of your credit score. Even if you can’t pay anything more than the monthly minimum balance, your continued history of paying on time reflects greatly on your reliability as a possible lender.

3)      Credit check overview—make sure you know what is on your credit history in order to best know how to improve your score. Plus, there might be things on your score that are incorrect. It isn’t super common, but it happens.

These aren’t really novel concepts and you may be disappointed in these steps, but they really are effective. A credit agency can’t expect you to be able to turn your credit score around overnight, so neither can the steps you take be done overnight.

In addition to these three steps, a slightly larger way to help your credit score is to be invested in some kind of an installment loan, such as an auto loan. That kind of commitment looks good on your credit report, especially if with every on-time payment (key rule #2!)

Another source of information on how to spruce up your credit score, is your personal banker. Whatever bank you’re with, their personal bankers have lots of information on your particular score and credit history. They know who to get you in contact with to fully understand what in your history is hurting you most so you learn for the future.

This week’s post is to address the tall tales of the dreaded Credit Score. I have included both general topics that you should know as a credit score holder, and direct topics concerning the credit issues that we, at the Mr. Ed Department, look at to help you, our customer, make your next financial move.

Myth: A poor credit score will haunt you forever.

The truth is your credit score only contains the last seven years of your financial history. That means bad moments in your credit history will fall off eventually and be taken out of your calculated score. Time heals all things…so the longer it has been since your last late payment, the better.

 More importantly, your credit score is used to tell credit lenders about your general spending behavior. Bad credit can be caused by any given number of circumstances: divorce, job loss or pay reduction, overuse of credit cards, etc. So a bad credit score doesn’t necessarily mean you can’t be considered for loans or credit accounts. Your credit history reflects those unexpected events that caused your financial situation some unsteady times, and lenders know it. Bad things just happen sometimes.

Also, keep in mind that your credit score is not the only factor as to whether you qualify for a financial loan.  At the Mr. Ed Department, in addition to your credit history, we also look at your current income and employment history. That way, our experts know how to find the quickest way to get you in a car you love at a price you can afford.

Still concerned about your credit score? Don’t worry! Getting approved for an auto loan with Mr. Ed helps build your credit! Having an installment loan, such as a car loan, helps your credit score. And we only work with companies that report your installment loan to the credit bureaus, that way your continuous payments stand out in your history.