• Catherine

Handling the Holidays with Better Credit

We can hear the jingle of holiday bells just around the corner which means parties, gift-giving, and joyous time spent with family and friends. It can also mean over-spending and unplanned expenses that can impact your whole year.

If you’re planning to purchase a home or refinance your current mortgage in 2020, you won’t want the holidays to waylay those goals with excess credit card debt and a sinking FICO score. So we’ve assembled 10 robust tactics to keep your score in healthy territory, and your dreams for the new year intact.

FICO is the abbreviated term for the Fair Isaac Corporation, and is the main bureau that determines credit worthiness for lenders. Scores usually fall between 300 and 850, with 670 considered average. Based on the factors that impact these numbers – bankruptcies, late payments, and debt-to-credit ratios, to name a few – here are the basic steps to address first:

1. Check your credit report. Most banks and credit cards now provide free FICO updates. If it doesn’t look right, request your free annual report and make sure there aren’t any errors.

2. Prompt payments. In addition to credit card, house payments, and other debts, some agencies look at timeliness of utilities and phone payments.

3. No new applications. Frequent or poorly timed applications for new credit can adversely affect your FICO score. Unless you’re trying to establish credit where there was none, wait until after purchase or refinance decisions.

While these three efforts are fairly obvious, there are additional actions to take for a more

aggressive impact on your score and borrowing ability:

4. Credit card management. Because credit card interest is among the highest that consumers will pay, focusing on these balances is the fastest way to make a difference. Pay on time, keep your balances low – ideally less than 30% of your limit – and tackle the cards with the highest rates first.

5. Don’t close the accounts! Even if you’re avoiding adding to the balance, don’t close out those older cards that establish your long-term credit. Keep a low balance and pay off each month.

6. The magic number. If you find yourself struggling to make payments on time, keep your eye on 30 days. Many creditors don’t report late payments until the 60-day mark so getting it in before 30 days past due could just protect your score.

7. Automatic peace of mind. Have the money for your monthly bills, but the due date keeps slipping by? Set up automatic payments for credit cards, utilities and more to reduce the stress and increase the score.

8. Be prepared. Tuck away savings of approximately six months’ income to compensate for unexpected financial emergencies and avoid credit-damaging late payments.

9. Don’t fall for the extras. When you get your free annual credit report, you’ll no doubt get pitched a lot of bonus products like monitoring and fraud alerts by the reporting agencies. Put that money toward your emergency fund in #8.

10. Call EnTrust Funding. The team at ETF can work with borrowers with credit scores as low as 500. We offer an array of loans and specialty products that are tailored to those with low credit scores.

Whether you’re looking to refinance in 2020, or want to get started on a debt consolidation plan before the holidays can compound your financial anxiety, ETF can sit down with you to discuss the possibilities. Just give us a jingle…

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