“I’m sorry, but at this time, I’m not able to do a loan”. This is a phrase none of us want to hear when we visit a bank or financial institution. It makes us feel dejected, upset, or like you’ve failed somehow. The reasons this sentence could have been said is numerous; your DTI (debt to income) is too high, your credit report has active collections, or maybe you have no credit. In any case, you want to know why you can’t get credit, or at the very least, what you can do to help improve or repair your credit. Sometimes it can be a simple fix, and other times, it can take a lot of work on your end, but there is usually a way you can succeed.
WHAT’S THE DIFFERENCE?
Most people know what a credit score and a credit report are, however, some may not know the difference between the two, or why each is important in its own way. A credit report is just what it says it is – a report that shows an individual’s current debts, including how much they owe on credit cards, auto loans, mortgages, or other unsecured debt, and it will show any active collections you may have against you. It will also show if you are late on payments, and how much you’re paying each month. A credit score on the other hand is essentially your grade. The number will range from 300-850 depending on the credit agency that is being used, and the higher the number, the better your score. This number can change each month depending on factors such as how much credit you’re utilizing, and how much debt you’re paying or not paying.
WHAT CAN YOU DO TO IMPROVE YOUR CREDIT STRENGTH?
So how can you improve your credit score? The answer depends on your situation, but here are a few tips and tricks to help you improve and manage your credit:
- Make all of your payments on time.
- Try to keep your credit card utilization under 10% if possible, but between 10% and 30% is also ok.
- Avoid excessive requests or inquires for credit.
- Don’t open new store credit cards just to save money. New accounts can lower your score and too many payments can be hard to manage.
- DO NOT close oldest account/card. Having this history of making payments is a huge benefit to your score.
- Keep a high line of credit and a low balance.
- Try to maintain a variety of accounts. Having revolving, installment, and secured financing with a good payment history will reflect a higher score.
LET LEGENDS BANK HELP YOU SUCCEED
By applying these tips and tricks to your finances, you will see an increase in your score. It may not be overnight, but it will improve after some work. One last takeaway is to not be afraid of using credit. Without the use of credit, you won’t have a score, which in some cases, may be just as bad as having a low score. If you have questions about managing your credit, or would like to speak to a loan officer about options, Legends Bank is here to help! Contact me at 573-426-5300, or, by email at chonse@legendsbk.com. We invite you to come enjoy the benefits and peace of mind that comes with doing business with Legends Bank.
Cody Honse is a loan officer with Legends Bank, specializing in mortgage and consumer lending, with over a decade of banking experience. Legends Bank is a locally owned community bank, and has been serving the mid Missouri area for over 106 years.
