Spring has sprung! And when I think baseball I think credit scores. Then again, after a 16-year career at FICO, there are few things that don’t make me think of credit scores.
So, before putting on our Panda hats and shelling out $9 for a beer (or are they $10 now at AT&T Park?), let’s take a minute to remind ourselves of the importance of building, rebuilding and maintaining our credit scores all season long. After all, you’d hate to have your next purchase of peanuts or Cracker Jacks denied due to a bad credit score.
1. Play ball. To have a credit score, you have to play the game. That is, you can’t just sit on the sidelines. A credit score predicts how you are going to pay your bills, based on how you’ve managed your credit in the past. If no recent credit activity appears on your credit report, perhaps because you have never used or have stopped using credit, a credit score has nothing to base its prediction on. The lesson here is to get out there and play the credit game, while playing it safe by: 1) paying on time, 2) keeping your debt — especially credit card balances — low, and 3) opening new accounts sparingly.
2. Step up to the plate. Whether you’re new to credit or have just come off of the (credit) disabled list, don’t be afraid to get back in the game with a secured credit card or loan. Secured cards and rebuilder (secured) loans can be an ideal way to build or rebuild credit, as the risk-free-to-the-lender nature of these accounts makes secured credit relatively easy to get, and can do as much toward building or rebuilding a good score as unsecured cards and loans.
3. Keep your eye on the ball. Everyone knows credit reports can contain errors, so take control of your credit by checking your credit report at least once a year, or more often, if you’re building or rebuilding. If you’re trying to dig yourself out of a protracted credit slump, you may also want to start monitoring your credit using a free monthly credit score.
4. Patience at the plate. In the same way a batter shouldn’t necessarily swing at the first pitch thrown, managing your credit requires the patience to allow your score to increase slowly over time, as your good credit history builds through consistent on-time payments and low debt. Or to put it bluntly, don’t swing at every credit card sales pitch thrown in your direction!
5. Be prepared to sacrifice. Is it really necessary to charge a $100 meal on that card tonight? Similar to a bunt or routine fly ball helping move a runner into scoring position, charging small amounts on a couple of cards and paying them in full each month is likely to help your score much more than making large purchases and minimum payments, and incurring huge finance charges.
Image: Donald Miralle