4 Ways to Flex Your Credit Muscles

By Erin Lozano, on August 16, 2010

Credit scores are all the rage these days. Granted, they are important to your finances. But where do they come from? How are they calculated? Who’s the scorekeeper? There are a lot of questions about credit, which is why I’m talking credit today. I’m not going to talk just about credit tips, but instead I want to examine four ways it could suit you to flex your thinking around the credit options you have.

Order your credit report

I have my financial dashboard on GreenSherpa, so I can see my entire financial picture as compiled by my banking institutions. But in a credit report, I can see the information as it is recorded by the credit agencies themselves. Reviewing your credit report is a good way to find anything unusual, and to then set about making corrections.

About every few months, I order my credit report. Occasionally, I will find something wrong and this causes me to look more deeply into the problem. This usually makes me feel more proactive about improving my finances.

If you see something that is truly an error you can dispute it. Most credit companies return a response that states the report is accurate, so the onus is on the customer to prove an item is wrong. The trick here is to be persistent. If you are persistent and write a letter every 30 days (it can even be the same letter), you’ll eventually fall into their file of customers who care, and they’ll attach documentation to their record making it more likely for them to make the correction.

Moreover, there’s a rule that states if they miss the 30-day window to respond to your inquiry, they must take the item off the report. So, stay on top of your credit record and you can keep it in its best shape.

Pay it early and pay in full

Paying your bills early and often looks really good on your credit report. Pay your credit card off as soon as the bill comes and you’ll have one pristine credit report.

Keep your credit line open

Five years ago, open, unused credit was a risk. If you had any credit card on your report that was not being used, you wanted to call and have them close it down so it reflected on report as closed.

Now, if you have a credit card with an available balance of $5,000 and you’re not using it, you look fiscally responsible to the credit companies. They reward you by increasing your credit score.

Just remember to use (or store) that credit card wisely.

Always ASK

This is one of my favorites and most useful, so I repeat it often: Periodically call your credit card and utility companies to see if you can get a reduction in interest, payments, whatever can work for you in that scenario. Tell the representative you’re having a hard time financially and you need a reprieve. Use that word: reprieve. Ask what are the offers that the credit company can do for you?

I had DirecTV respond by giving me six months of service. Verizon also gave my family six free months so that we wouldn’t cancel. Be aware that sometimes they’ll put you on a financial plan that is reflected on your credit report. Sometimes that is not a big deal, e.g., if it is saving you several hundreds a month. The slight and temporary ding to your credit score is worth it. Money and credit is a game of perspective. Rise above the rules long enough to assess what would work best for you and re-engage into stronger relationships with your service providers.

Do you know your credit scores? Get instant access to your credit score for free with Credit Sesame.

Erin Lozano is co-founder and COO of GreenSherpa and is dedicated to inspiring women to live and spend authentically.

Add Your Question or Comment (3 Comments)

1. John Armstrong:

   August 17, 2010 at 3:21 am

   Thank you for the useful information. I like the idea of keeping the credit lines open. Will be coming back for more articles.

   I often publish what I call Financial Independence Compilations on my site (blog carnival) (http://www.ditchtheboss.blogspot.com). I would appreciate if you submitted your articles to my weekly compilations. Your articles are useful and can help people to learn how to manage their finances.

   All the best
2. Kris:

   August 17, 2010 at 3:11 pm

   Just make sure to avoid ordering your credit report from those “free credit report” companies that require you to sign up for credit monitoring (unless, of course, you really want it).
3. Jessica:

   August 22, 2010 at 4:03 pm

   Thanks for the article. I was contemplating if I should payoff my credit card or if I should leave a small balance to help bring up my score.