Do banks see you as a good candidate? Here’s how to put your best financial foot forward.
LGBT people often encounter different financial ups and downs than their straight allies. For example, your likelihood of facing an unplanned pregnancy is comparatively minimal; however, those who do want to pursue parenting will likely run into costs related to projects like surrogacy or adoption. What unites us all is the desire to have good credit, so that when you find yourself in need of funds, you’ll be able to access them. Let’s take a look at how credit works and some simple tactics you can use to maximize it.
What’s a Credit Score?
A key to understanding your financial well-being is your credit score. This score can affect the interest rate you pay to lenders and even whether you’re approved or declined for a loan.
Your credit score is based on your payment history, the number of accounts you have open and the amount owed on those accounts. The number ultimately represents the risk a lender is willing to take when you borrow money. Everyone has three credit reports — one from each of the major credit bureaus: Experian, Equifax and TransUnion.
You are entitled to a free credit report from each of the three credit reporting agencies once every 12 months. Request your free report from at visitannualcreditreport.com. Once you get the report your score will fall into one of five categories: Excellent (750+), Good (700-749), Fair (650-699), Poor (600-649) or Bad (below 600).
Why Do I Have a Low Credit Score?
There are several reasons why you might have a score that’s lower than you expected. They may include:
If you have a history of making late payments, creditors will see you as a bigger risk.
Amount of Debt
If all of your credit cards are currently maxed out, creditors will worry whether you’ll be able to continue making your payments or take on more credit.
Age of Accounts
If you are newer to credit and borrowing, you don’t have any history. Keep paying your bills on time and you will see your rating improve.
Lenders like to see that you can handle different types of debt from credit cards to auto loans.
History of Credit Applications
Think twice before you apply for every credit card offer you get in the mail. If you apply for several in a month, creditors will worry you’re overextended financially.
How do I keep a good credit score?
The easiest way to keep that score high is to pay your bills on time, including rent and utilities. You can make that easy by setting up auto-payments with your credit card companies or bank. This will ensure you wont get dinged for payments made past the due date. The next step is to fix your credit utilization ratio — how much of your credit you use. If your balances are more than 30% of your limits, your score will suffer, even if you pay off balances in full every month on-time.
Another important strategy in pursuing good credit is to make sure your credit reports are accurate. Errors to look out for in your score include:
Incorrect information (name, phone number, address); accounts belonging to another person with the same or similar name as yours; false accounts resulting from identity theft
Incorrect Reporting of Account Status:
Closed accounts reported as open; accounts wrongly reported as late or delinquent; incorrectly recorded dates (of payments, account openings or delinquencies), debts listed more than once
Inaccurate balances or credit limits
If you find any of the above errors, it can take time to correct the information, but each credit agency has (allegedly straightforward) processes to help you address issues.
The Bottom Line
Your credit score can change your life. It will determine whether you qualify to borrow money and at what interest rate you’ll pay it back. If you’re not happy with yours today, make sure you’re paying bills on time and start keeping low balances on any open credit, so when the time comes, banks will be eager to help you finance that dream home — or whatever your heart desires.
Last modified: March 21, 2018