Many photographers have this problem because they don’t develop and use a budget and/or don’t spend enough time managing their finances. Part of your credit obligation is to keep good records, so you know exactly what is due when and you note when and how each creditor was paid.
2. Another part of your financial management is periodically checking your credit reports from the three major credit bureaus: Equifax, Experian and TransUnion. The primary benefit of doing so is to look for incorrect information and then have the erroneous information removed or corrected.
By law, the three credit bureaus must provide you with one free report per year; you will be charged for any additional reports.
3. Just because a credit card company or the holder of student loans, for example, has written off an old amount you owed them and couldn’t pay doesn’t mean it disappears from your credit reports or affect your credit score.
By contacting that old creditor and at least settling for an amount less than what you actually owed will remove that old balance from the creditor’s books and add to your credit worthiness.
4. Another extremely useful method to improve your credit is that your account balance on a credit card, for example, should never be more than 50% of the credit limit. If possible, then keep it even lower, at 20% to 30%. This could be your first positive step towards paying the entire balance as soon as possible. Read the PhotographyTalk.com article, 15 Life-Changing Realities Any Photographer Must Face To Become Debt-Free, for more information.
If you are already able to maintain a balance less than 50%, then you may want to ask the creditor to reduce your total credit limit, but still keep the balance at less than 50%. This can have a positive effect on your credit rating.
For example, you owe $250 on a credit account with a $1,000 limit, or 25%. Reduce the limit to $750, and the balance of $250 is now 33%, which is still less than 50%.
5. If your financial situation makes it difficult to maintain an account balance at less than 50% of the credit limit, then you may be able to raise the limit, which will, in effect, move the balance to less than 50%. Of course, you must have a credit rating that would qualify you for a higher limit and the discipline not to use the additional credit available.
Don’t request the maximum limit for which you may qualify. For example, if you have a $750 balance on a credit card with a $1,000 limit, or 75%, then increasing the limit to $2,000 (even if you qualify for a $4,000 limit) reduces the percentage to 37.5%, which is less than 50%, your goal.
6. Time is your ally, which, of course, requires that you be patient and delay large purchases you would have purchased with a credit card. Few methods improve your credit score as well as a long record of paying your bills by their due dates and using credit conservatively.
The amount of time you must wait before your credit improves, of course, depends on the severity of your problem. Typically, after one full year of on-time payments, your score should slowly increase. This increase will become significant after 2 to 4 years and 7 years of a stellar payment record should eliminate any bad credit items and earn you a much higher credit rating.
7. If you’re in the enviable position of owing no creditors other than a home mortgage and/or a car loan, then you can improve your credit score by opening a few consumer credit accounts. This is only a good idea if you have the discipline to use these accounts sparingly and make the payments on time. Creating this good-credit history can be very helpful if you are not yet a homeowner, but plan to be one within a few years.
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