4 Spring Cleaning Tips for Your Credit

blog-spring-cleaning-2013It’s that time of year where the days are getting longer, birds are chirping and the sweet smell of spring is in the air.

 

As we come out of winter’s hibernation, we also take notice of those areas and items so easy to brush aside in the winter months that now need attention – painting the fence, trimming the hedges, cleaning the windows, washing the salt and soot off the car, etc.

 

A thorough spring cleaning is an annual ritual for many people as spring time signals a new beginning and fresh start.  It is also an ideal time to check on your credit, clean up any potential reporting errors and present the most attractive view of creditworthiness should you plan on applying for credit in the next couple of months.

 

Several credit related “spring cleaning” tips:

 

  1. Get a copy of your credit report and check to ensure all information being reported is accurate and up to date.  If you find errors, address them immediately using the dispute resolution processes managed by the credit reporting agencies.  They have 30 days to investigate and resolve.  Any changes made to your report will be considered in the score calculation the next time your report and score is requested.
  2. Be careful about building up big balances on your credit cards.  Going on a spring time buying binge (new clothes, summer vacation deposits, airline tickets, etc.) can make your look more indebted causing you to lose points and make your profile look more risky to lenders.
  3. Pay down credit account balances – especially revolving type credit (credit cards, etc.) if you have the income capacity to do so.  This action can potentially increase your score and save you money from interest rate fees.
  4. Only apply for credit if needed. While it may be tempting to apply for that home improvement credit card to instantly save 10% on all your spring cleaning supplies and tools, it could potentially have a negative impact on your credit score – affecting access to and cost of new credit you may be seeking in the near term.

It has been a long winter/late spring for many of us, so get out there and dust off the lingering effects of winter to pave the way for a great summer season.

 

Tom Quinn is the Vice President of Business Development for myFICO, and has over 20 years of experience working with consumers, regulators and lenders and regarding credit related questions and initiatives.

Comments

  1. philip mathews says:

    So what you are really trying to say is it us ok to have credit just never use it or you will get in trouble. Doh!

  2. Gmacuser says:

    I like how everything is number 1

  3. Charlotte Moore says:

    How can you consolidate if your score are and can’t get a loan?

  4. Edward Kolesa says:

    “Be careful about building up big balances on your credit cards. Going on a spring time buying binge (new clothes, summer vacation deposits, airline tickets, etc.) can make your look more indebted causing you to lose points and make your profile look more risky to lenders.”

    Why do all three credit reporting agencies reduce my scores,because of high balances when each and every month my balances are and have always been paid down to zero?

    • Ramel Moore says:

      @Edward Kolesa. That’s because the credit agencies only take into account how much debt you have accumulated within the time period it’s reported to them by lenders. The trick is you have to pay down your debt before your billing cycle closes. So if that means you have to make a payment beforethe cycle closes then that’s what you to do to see your score go up and you will if you do it this way. Remember credit agencies don’t take into account whether you pay your debt off in full each month or not, they look at how much debt is being reported which is usually the day that your billing cycle closes. Good luck.

  5. Jena-Auerstadt says:

    Personally, I love how at the same time that the website is telling you not to apply for new credit cards, there are ads for an endless variety of cards scrolling across the screen at the same time . . . . Can you say “hypocrisy,” boys and girls?

  6. In order to build credit I needed to get several credit cards, paid off a car, but applied for four new credit cards. Score did drop a little but will the 11 inquires stop me form re-financing my home?

  7. As part of spring cleaning, why not go paperless! It’s a great way to start green living.

  8. Phillip says:

    Edward, using your card/cards for anything that’s exceeds 30% of your credit limit will reduce your score because it compare’s the amount of credit used versus credit available. Any and all balances are reported monthly. Paying them off is great and will show your account in good standing but they still report the highest amount spent on the card/cards each month.

  9. Shahid Karim says:

    I have few hundred dollars for few medical bills,& I dont have the income capacity to take care of them How can I get rid of that & build my credit, will someone guide me pls.
    Shahid

    • welcome1 says:

      i started rebuilding my credit earlier this year . my credit score was a whopping 495! a mortgage broker referred me to a credit repair company he also advised me to open a secured card and obtain a secured loan from a local credit union. i checked my credit this week and its up to 613. I have since received notice from equifax that 6 negative items where removed. I am hoping i can get to the 640 mark so I can start looking at mortgages. He said not to pay old charge offs unless i recieve in writing that it would be “removed” because a paid charge off is still a charge off and does nothing to boost scores. of course u can challenge them yourself but that can reage the accounts and lower your scores. the credit game is so tricky u gotta be so careful

  10. David W says:

    You can use credit, just use about 1/3rd of the available balance. I always try to pay my credit card balance by the due date so I don’t have to pay a finance charge. If I see that I will end up with a $300.00 balance and I have 4 weeks to pay it, I devide it and pay $75.00 each week.

  11. This is awesome, thanks for sharing! I’d love to give this a try some time! I’ve never been big into my cleaning, I’ve got a friend who’s recommended her rebecca’s cleaning service Fullerton to give that a try. But I think I might try these first and see how it goes. Thanks again!

  12. Michael Thompson says:

    @E Kolesa…I understand that you pay your balances to zero each month…but don’t forget the possibility that these creditors may report to the bureaus BEFORE the statement period ends, which may well be when your balances are the highest, right before you pay them down each month per your due dates.. I have taken the trouble, simply by asking, all my creditors when they actually report data during the month, –this could also be determined by pulling my credit reports and comparing them to live balances throughout the month. Hope this helps!

  13. It’s all about responsible spending. If you want to avoid debt, use your credit card wisely.

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