Expert Don Coolbaugh of Advantage Funding continues a weekly series of questions and answers for chauffeured transportation operators on all matters related to financing and leasing fleet vehicles.
QUESTION: What can I do to improve my credit score?
ANSWER: A credit score is something that is developed over time and is determined by not only credit cards and loan repayment histories but by employment history and even residence histories. It starts once you become of age (first credit card or student loan) and continues forever.
The best thing anyone can do is take this responsibility extremely serious from the start and know that it will affect most things you choose to do in life. The best plan is to not overburden yourself with unnecessary debt, know the difference between good debt and bad debt, and understand that how you pay your bills will be a permanent record for all to see. It is much easier to keep up a good credit score as opposed to remedying a bad situation after the fact.
Nevertheless, there are times when bad things happen to good people and your credit score is affected. The best first step to take is to get a copy of your credit report and do some analysis as to what has gone wrong and what credit was affected. Afterwards the following steps should help, but remember, repairing a credit score takes time and you must be consistent if things are going to change.
First, don't take on any more debt and more importantly DON'T cancel credit cards immediately. Canceling cards actually lowers the amount of credit available to you which displays negatively by showing debt to available credit too high.
Work to keep balances off the remaining cards and pay down the debt.
Keep payments up to date to the best of your ability.
Length of employment and residence helps display stability. Excessive movement in either will hurt your outcome. Stay put!
Excessive pulls (running your credit report) on your credit will also diminish your score. Every time you apply for a new card, a loan or anything that needs a credit inquiry, it will be pulled. As stated earlier, you would be best served to not do anything as it relates to additional credit or loans.
If you must incur a new debt, make sure it is a necessary one and it is a debt that will help towards growing your net worth. Make sure you can make the payments before you pull the trigger.
There are many fine companies that specialize in helping people with credit issues and I suggest the Better Business Bureau to investigate those with sound business practices.
Source: Don Coolbaugh, vice president of sales, Advantage Funding Inc.
E-mail finance and leasing questions to: Martin@LCTmag.com