photo credit: 401K

A tenant emailed me a while back asking why landlords rely so much on credit scores and how it just wasn’t fair, because he was basically a cash only guy but he paid his bills in full and on time.He didn’t have bad credit he had no credit. So he was better off than I was 10 years ago when my husband left me one day, took the furniture and moved in with his new girlfriend. While it was a good thing looking back, at the time I was heartbroken and hid under the bed for 6 months and when the phone got cut off it was a real relief because at least bill collectors would stop calling me. It was a pretty dark time. Needless to say by the time I glued Humpty Dumpty back together again my credit was destroyed.

Shit Happens

Situations occur that will completely ruin your credit. At one point you’ll want to establish or reestablish your credit. I am very conservative about how much debt I carry. Unfortunately whenever you want something such as a renting an apartment, mortgage, overdraft or a even cell phone you need credit.

1 – You Have To Play The Game

Games are all about the score and so is your credit. Certain things you do can lower your score, or take away points and other things you do can increase your points. One thing is for sure, if all you do is sit on the sidelines, you’ll never get one single point. For a long time this was me, I didn’t have a credit card and I did not care to have one. Here’s how to play…

2 – Pay Bills On Time

Cell Phone companies are notorious for slapping your unpaid bills on your credit report. Ditto Cable or other utilities. So make sure those bills get paid pronto. Paying the bills on time doesn’t really increase your score just keeps it from getting lower.

3 – Getting A Card

This is the first card I got in my wallet…People’s Trust Secured Mastercard I sent them $1000 and they sent me a card with a $1000 limit. They also charge me extra every month and $50 something bucks a year. Don’t make the same mistake I did and get a Money Mart prepaid card or one of those Vanilla Mastercards. They don’t report to the credit bureau.

4 – Using Half

Use only half the limit you are allowed to use. If your limit is $1000 use $500. This is because other credit lenders look at your credit utilization percentage. If it’s 100% it looks like you’re a credit hog and about to go bankrupt. Even if your limit is $500 it looks bad on you if you use your entire credit limit. So to recap… 50% of your credit card good points – 100% bad points.

5 – How To Never Miss A Payment

In my business, I often get large lump sum payments. So my instinct is to say…I’ll wait a few days then pay it off. Then If that large payment is late it’s a problem because I missed a payment. What I do now is…as soon as the bill comes in before the due date, I’ll take that bill and pay the minimum payment immediately. When the lump sum comes in I pay it off. Missing a payment = mucho bad points.

6 – Paying It Off

There are no rules that say that you cannot put all your pay on there and then use the credit card to pay bills if you have to. The point is that the balance went to $0 Paying your credit card bill off in full = Lots of good points.

7 – Using Other People’s Credit

Let’s say you’re a student and you want good credit but don’t really want a credit card. If your parents have a credit card, they can put you on theirs. When you get the card, shred it or leave it with your parents. Now every time they pay their bill you get points. Don’t do this if your parents don’t pay their bills on time.

8 – Wait

This may be difficult for some people, but you can’t apply for 87 credit cards the same day. It makes you look like a crackhead looking for a fix. Every credit inquiry is reported so wait about 6 months or a year, make your payments and chill. Too Many Inquiries = Bad Points. 

9 – Apply For Another Credit Card

If you wanted to get another card faster you could get another secured card pretty much right away. Otherwise wait until your credit builds up and you’ll find people offering you cards. The other day I walked into my bank and they offered me a credit card. A Few More Cards = More Points Every card gives you some points as long as you follow the rules of the game.

10 – Use It Wisely

It’s easy to get out of control when you have lots of credit. Credit Cards are not Santa Claus you have to pay it back. If you don’t use it wisely, then interest rates go up and up. So sometimes less is more. Honestly I have no idea what I’ll buy with the credit cards I have now when I can just use my debit card. I’ll have to make an effort to buy gas or something. Seriously.

If you already have good credit following these tips can get you better rates and if you have none or bad credit you can work on your credit to improve it. Anyone else ever get themselves in hot water with their credit?