Mashable's latest #BizChats Twitter chat discussed ways in which people can revive their credit scores.
[seealso slug="spring-clean-credit-score-bizchats"]
Money experts shared tips on the most effective ways to boost a credit score; they included: Farnoosh Torabi, money strategist and host of So Money, a daily podacast; John Ulzheimer, president of consumer education at CreditSesame.com; and Lauren Young, money editor at Reuters.
Over the course of an hour, @MashBusiness covered an array of questions, ranging from the how the new FICO credit-score system will affect consumers, to the most important facts about credit scores that are overlooked.
[img src="http://admin.mashable.com/wp-content/uploads/2015/04/healthy_credit_score_pin.png" caption="" credit="" alt="healthy_credit_score_pin"]
Check out highlights from the chat in the Storify, below:
[View the story "#BizChats: Spring clean your credit score" on Storify]#BizChats: Spring clean your credit scoreMashable hosted a #BizChats Twitter chat to share tips on how to raise a low or neglected credit score. Storified by Mashable· Wed, Apr 22 2015 20:10:55
Everyone knows that credit scores are important, but when it comes to understanding the implications of how to achieve a healthy one, most people don't know where to begin, or how to maintain it. That's where we come in.
@mashbusiness and several money experts participated in a #BizChatsTwitter chat to discuss the most effective ways to boost a credit score.Welcome to our #BizChats Twitter chat! Today we'll be discussing how to spring clean your credit score. Please introduce yourselves!Mashable BusinessA warm welcome to our career experts: @FARNOOSH, @johnulzheimer, and @LaurenYoung! #BizChatsMashable Business#BizChat’s tip: Be sure to number your answers according to the question you're answering. (ie., Q1.-->A1., Q2. --> A2., Q3. --> A3.)Mashable BusinessQuestion 1:Q1. What are credit scores used for and why are they so important? #BizChatsMashable BusinessA1. Approve/deny decisions, setting terms like rates and limits, insurance premiums, deposit requirements for utilities. #BizChatsJohn UlzheimerA1: Scores are important- we've found that the diff. between an excellent and poor score could amount to $230,000 over a lifetime! #BizChatsCreditKarma@mashbusiness A1: They are very important since a higher score can lead to lower interest rates or not needing to put deposit. #BizChatsWayne ChanA1: Healthy credit = healthy financial life. #ChaseSlate found 90% recognize importance of access to credit throughout life... #BizChatsFarnoosh TorabiA1. The better your credit reports/score the more options you'll have to choose from re lenders and their products. #BizChatsJohn UlzheimerA1) A credit score grades your overall financial health. Below 600 is considered bad. 620 to 690 is average. Above 700 = good !!! #BizChatsLauren YoungA1) Here are the 5 factors of a credit score http://t.co/JdLMZgaYXz #BizChatsLauren YoungA1. They determine your costs for credit as well as your access to credit. #BizChatsJohn UlzheimerA1: Your credit score is often used to determine whether you're approved for credit, what rates you'll get, and more. #BizChatsCreditKarmaA1: Credit scores measure your credit worthiness and lenders request them before deciding whether to extend you credit #BizChatsFarnoosh TorabiA1: Landlords may also request to see your credit history and score before approving your lease. #bizchatsFarnoosh Torabi@mashbusiness A1 they can be used for nearly anything: getting a job, a loan, a credit card -- that's why they're so important #BizChatsLiz FurlA1: Credit scores have become as important to our financial health as job status & income http://t.co/ALqY7nDeWD @johnulzheimer #BizChatsCredit Sesamea1: particularly for young people, their credit scores are huge for getting apartments, especially in crowded markets. #bizchatsChristine DiGangi@mashbusiness A1: Credit scores are used to determine if someone is credit worthy when applying for credit like loans. #BizChatsWayne ChanA1. But please NOBODY suggest they're used for employment screening!!! Huge myth. #BizChatsJohn UlzheimerA1: Credit scores are the pulse of your financial life. High is good. Low is bad. #BizChatsMoney Millennial@mashbusiness A1: They can be used for loans, fraud reporting, determining your reliability #bizchatsMoney MillennialA1) Since the credit crisis, a "good" credit score has been harder to achieve. #BizChatsLauren Young@mashbusiness A1. They're used for loans, jobs, & anything money with the intention of having an idea how reliable you are. #BizChatsMilap@mashbusiness A1: they are your financial reputation & they are used when determining credit & interest decisions by institutions #BizChatsDebbi KingQuestion 2:Q2. How do you build credit? What’s the ideal age to start building credit? #BizChatsMashable BusinessQ2) No "right" age to start establishing credit, but you want to credit history by time you graduate college/enter workforce. #BizChatsLauren YoungA2. ASAP!! 18 if possible. You benefit from a well aged credit history so waiting only puts you behind. #BizChatsJohn Ulzheimer@mashbusiness being consistent with credit card bills is one of the quickest way to gain good credit or a quick way to mess it up. #bizchatsEmily WarrenQ2: The earlier you begin building credit the better. Credit scores factor in the length of your credit history. #bizchatsFarnoosh TorabiA2. I like the authorized user strategy. Don't like co-signing b/c of the liability risk. #BizChatsJohn UlzheimerA2: I opened my first card in college. But these days you'll need either a cosigner or proof of income to open a card before 21. #bizchatsFarnoosh Torabi@mashbusiness A2 you can get a credit card and pay off the balance as soon as you charge something #BizChatsLiz FurlA2. Secured cards are ok as well, as long as they report to all three credit bureaus. Otherwise it's a tree falling in the woods. #BizChatsJohn UlzheimerA2) Big part of your credit score is based on debt outstanding. See this chart from @creditcards.com
#BizChats http://t.co/LsrpprKHXuLauren YoungA2) Start young, and build credit by paying back student loans and credit cards. #BizChats @mashbusinessLauren YoungA2: If you're just starting to build #credit, start with a secured #creditcard: http://t.co/nhcmbsKesq #BizChatsCredit SesameA2: To build credit, get a form of credit and use it or be an authorized user on a credit account. Start young if possible! #BizChatsCreditKarmaa2: parents can help their kids build credit by making them authorized users on credit cards. #bizchatsChristine DiGangiA2: A key way to build credit is open up a credit card and establish good credit history by paying off entire balance each month #bizchatsFarnoosh TorabiQ2) Pay your bills automatically. That will help you build credit. #BizChatsLauren Young@mashbusiness A2. You build credit by paying full amount on time. I think you can start building around 17 or 18, which is better #BizChatsMilapA2. Credit builder loans are also very effective at building credit. Never heard of them? You're not alone. #BizChatsJohn UlzheimerA2: Pay your bills on time and don't carry a high balance. Credit history & credit utilization make up > 50% of your score. #bizchatsFarnoosh TorabiQuestion 3:Q3. What tools are available to check your credit report? How often should you check it? #BizChatsMashable BusinessQ3) @Ally, @Chase @BofA_News @Barclays @Discover @USAA all providing credit scores on statements http://t.co/iADQ5I2Y6U #BizChatsLauren YoungA3. We've got several of them on this Tweet Chat so I'm sure they'll all chime in. http://t.co/oowpEyXKF2 is one. #BizChatsJohn UlzheimerA3: @johnulzheimer recommends checking & monitoring your credit reports several times a year, here’s why: http://t.co/6CeEmTgUdz #BizChatsCredit SesameA3. Checking your credit once a year is like checking your bank statements once a year. Silly. Once a month is the new black. #BizChatsJohn UlzheimerQ3) Credit reports let you see who your creditors are, and you can make sure nothing fraudulent is happening to hurt your score. #BizChatsLauren YoungA3: Due to credit score disclosure laws, lenders must in some cases tell loan and credit applicants their score. #bizchatsFarnoosh TorabiQ3) Get free credit reports (not credit score!!!) from @Experian_US @TransUnion @Equifax. Spread requests throughout year #BizChatsLauren YoungA3. Bottom line is the trend toward "free" credit reports and scores has made them widely accessible for all of us. #BizChatsJohn UlzheimerA3: And some customers may receive ongoing access to their score as a benefit. #bizchatsFarnoosh TorabiA3. Also, depending on what state you live in you may be entitled to additional free credit reports. #BizChatsJohn Ulzheimer@mashbusiness A3 there are things like http://t.co/aQFS16B2ft, and I think checking once a year is recommended #bizchatsLiz FurlA3: Check your #credit report often for signs of identity theft http://t.co/GW8PNrvvqY @johnulzheimer #BizChatsCredit SesameA3: Check your score well and often. Despite myths, there's no harm down when you check your score yourself. #bizchatsFarnoosh Torabi@mashbusiness A3: I would say check at least once a year or before applying for credit/credit limit increase. #BizChatsWayne Chana3: and yes, shameless plug: you can get free credit scores & a free credit report summary every 30 days on http://t.co/3oz7p1vzvB #bizchatsChristine DiGangiQ3) Use a big financial institution? Chances are you can now find credit score on your credit card statement. #BizChats @mashbusinessLauren Younga3: annual credit report dot com — three reports, once a year, all for free #bizchatsChristine DiGangiA3. When you apply for a mortgage OR are denied b/c of your score the lender must provide a "score disclosure notice" #BizChatsJohn UlzheimerA3: #ChaseSlate, for example, is offering card members free monthly FICO scores and credit bureau report summaries. #BizChatsFarnoosh TorabiA3: We can do the work for you! You can also check out http://t.co/qsZ0bnyF6e http://t.co/shaJKx6Y67 @johnulzheimer #BizChatsCredit Sesame@mashbusiness A3: I check my report through Equifax or Transition which is where most lenders are likely to check the report. #BizChatsWayne ChanA3. We've got several of them on this Tweet Chat so I'm sure they'll all chime in. http://t.co/oowpEyXKF2 is one. #BizChatsJohn UlzheimerQuestion 4:Q4. How will FICO’s new credit scoring system affect consumers? #BizChatsMashable BusinessA4. For clarity, the new FICO score we're talking about is not FICO 9. We're talking about their alternative data score. #BizChatsJohn UlzheimerA4. Technically it's not a "credit" score b/c it doesn't consider credit info. Just alternative data like utilities. #BizChatsJohn UlzheimerA4. But, this isn't FICO's first rodeo and they have good partners for this new score (Equifax and LexusNexus). #BizChatsJohn UlzheimerA4. And, it'll only be as good as billed IF lenders are confident that the scores based on alternative data work. #BizChatsJohn Ulzheimera4: yeah FICO says it's only going to be used for people who don't have general FICO scores aka "unscoreables" #bizchatsChristine DiGangia4: last tweet in reference to the FICO/LexisNexis/Equifax collaboration. FICO 9 is good news for people with medical debt. #bizchatsChristine DiGangiA4: The new score lets lenders assess borrowing risk of consumers with limited credit history – so-called thin files. #bizchatsFarnoosh TorabiA4: Highly recommend @johnulzheimer's article on what you should know about FICO 9 http://t.co/Ekj2KuHbp4 #BizChatsCredit SesameA4. @vantagescore and @experian are also doing work to score more people. Experian with their rental data & VantageScore with VS3 #BizChatsJohn Ulzheimera4: fico 9 also good news for people with paid collection accounts. I wrote a thing on it » http://t.co/RbU3StIGqz #bizchatsChristine DiGangiA4. FICO 9 is the one that ignores paid collections and discounts unpaid medical collections. Not the new FICO alternative data score.John UlzheimerA4: It will use alt data, including payment history with cable, cellphone & utility bills. #bizchatsFarnoosh TorabiA4) @FICO's new scoring model to help lenders better assess risk http://t.co/3S1r8WDwzl #BizChatsLauren YoungA4: Debt related to medical bills will also have a smaller impact in the new scoring model. #bizchatsFarnoosh TorabiA4. Still, the best SCORE to have is a traditional credit score. Hands down.Oldest, most established, widely used. #BizChatsJohn UlzheimerQuestion 5:Q5. How can mortgages and student loans negatively impact your credit score? #BizChatsMashable BusinessRatios of debt-to-income and credit-used-to-credit-available can have serious impacts on your score. #bizchats A5Lois Martin #121A5. You can add auto loans to that mix too. It's the revolving debt that's problematic. Not the installment debt. #BizChatsJohn UlzheimerA5) As an aside...car dealers may use a slightly different score than mortgage lenders http://t.co/0I7vRDdddt #BizChatsLauren YoungA5: Credit scores like to see that you can manage a variety of credit wisely. #bizchatsFarnoosh TorabiA5: Like other credit accounts, late payments on mortgages and student loans can drastically hurt your credit health. #BizChatsCreditKarmaA5: Student loan #debt isn't the worst kind of debt you can have http://t.co/jlieJ3iXt5 @johnulzheimer #BizChatsCredit Sesameq5: not paying your student loans can throw you in a pit of endless financial misery, for starters #bizchatsChristine DiGangiA5) If you don’t pay mortgage/loan bills in a timely fashion (or worse default) it can RUIN your credit score. #BizChatsLauren YoungA5. So, if you're going to choose between paying off credit card debt or mortgage/student loan or auto debt...ALWAYS choose card. #BizChatsJohn UlzheimerA5: Missed mortgage/student loan payments will have a negative impact on your #creditscore: http://t.co/cqdqXrWEjd @johnulzheimer #BizChatsCredit Sesame@mashbusiness A5 having a foreclosure and a defaulted loan (I have both) drops your score so much. STAY ON TOP OF PAYMENTS #bizchatsLiz FurlA5. Not much, unless you miss payments and/or default. Installment debt has very little impact on ur scores. #BizChatsJohn UlzheimerA5. Did you know student loans are reported on a disbursement by disbursement basis? So, one education can look like 8 loans. #BizChatsJohn UlzheimerA5: Having a mortgage and student loan - and paying them on time - is positive for your credit score. #bizchatsFarnoosh TorabiQuestion 6:Q6. What ways can you bring up a low credit score? #BizChatsMashable BusinessA6. Silly tactics can be expensive and ineffective. Beware those who promise fast results. #BizChatsJohn UlzheimerA6: Knock down that credit card debt. People with highest scores tend to use less than 10% of their credit limit. #bizchatsFarnoosh TorabiIn MOST cases (check yours!) student loans and mortgages carry reasonable int rates so you can focus on paying other high int debt #bizchatsLois Martin #121A6. #1 most actionable way is to pay off/down credit card debt. Assuming ur scores aren't trash b/c of derog data. #BizChatsJohn UlzheimerA6) Pay down revolving debt to boost debt utilization. If you have $10,000 credit limit, cut your debt owed to $1,000. #BizChatsLauren Young@mashbusiness A6 pay off loans. Make timely payments. Go through rehab programs. Wait (ha) #bizchatsLiz FurlA6. You also have to be reasonable. Some scores take years to improve. Our system is unforgiving if you don't pay bills on time. #BizChatsJohn UlzheimerA6) Your credit could be dinged when someone looks at it, so be careful about opening new credit lines. #bizchatsLauren YoungA6. According to FICO study, people w good scores generally always have good scores. people w bad tend to always have bad scores. #BizChatsJohn UlzheimerA6: .@johnulzheimer's advice to improve your credit is to focus on credit score factors http://t.co/y7U255Gmrn #BizChatsCredit SesameA6) Keep debt levels to less than 30 percent of an account's credit limits. #bizchatsLauren Young@mashbusiness A6: Pay it off! Start with cards with the smallest balances and prove your reliability #bizchatsMoney MillennialA great start is to order free copies of your credit reports and check them carefully for errors and outdated informaton #bizchatsLois Martin #121A6: You need to understand the factors that are driving your credit score in order to bring it from good to great to excellent! #BizChatsFarnoosh TorabiA6. If someone charges u to improve ur scores, that's credit repair. There's a Federal statute that governs how they operate. #BizChatsJohn UlzheimerA6 cont... it's called the Credit Repair Organizations Act. Read it and learn your rights!! #BizChatsJohn Ulzheimera6: being patient is huge with improving your credit. (and that's something generally hate hearing, but it's so true) #bizchatsChristine DiGangiQuestion 7:Q7. What are the most important facts about credit scores that are overlooked? #BizChatsMashable BusinessA7. We've also found that a lot of people are scared of checking their credit because they think it'll hurt their score. Not true! #BizChatsCreditKarmaQ7) Credit scores change! Your 700 today, might be a 680 tomorrow. Don't stress about those moves. #bizhchatsLauren YoungA7. U don't have right to free annual credit score (like you do to see ur credit reports), all generally range from 300-850 #BizChatsJohn UlzheimerA7: Credit scores are used not only by lenders, but sometimes landlords and utility/cable companies, too. You can't escape them! #bizchatsFarnoosh TorabiMany credit unions offer decent credit builder loans. There are other options, too. #bizchats https://t.co/RPjggOHrqJAFS Debt Help NowA7. Scores used in mortgage world are 4 generations off the most current version, are not a permanent part of ur credit report...#BizChatsJohn UlzheimerA7. Don't consider education or other ECOA prohibited factors. #BizChatsJohn UlzheimerA7. Not used by employers, don't consider income or wealth metrics, we don't have just one score. Can go on and on and on #BizChatsJohn UlzheimerA7. Consumers can have more than one score from each bureau! #BizChatsCreditKarma@mashbusiness Pay your phone, gas, electric and other small bills on time. Utilities can negatively impact your score if neglected #bizchatsAntoinetteCheck your reports from ALL agencies, not just your FICO score. Look for errors, omissions, outdated info #bizchatsLois Martin #121A7: #ChaseSlate’s new dashboard provides a 360° view of your credit health: FICO score, reasons behind it & tips for improvement. #BizChatsFarnoosh TorabiA7: 90% of lenders use the FICO credit score, so that's the one you want to check, too #bizchatsFarnoosh TorabiA7: The factors behind a #creditscore are more important than the score itself: http://t.co/ZMMMGcjSuL @johnulzheimer #BizChatsCredit SesameA7. In insurance world it's not all about FICO. It's about the CP-Attract Score? Ever heard of it? You have 2 of them. #BizChatsJohn UlzheimerA7: You should check your score, if for no other reason than to make sure it's not unusually low. Could be a sign of ID theft. #bizchatsFarnoosh TorabiTo keep scores strong and sustained, you should use less than 1/3 of your avail credit at any one time #bizchats A7Lois Martin #121Question 8:Q8. What’s the best advice you have about debt and boosting your credit score? #BizChatsMashable BusinessA8. If you'll follow those 3 simple steps then you don't need to worry about ur scores b/c they'll all be great. #BizChatsJohn Ulzheimer@mashbusiness A8: Monitor! Monitor! Monitor! Don't be afraid - learn what impacts your score and what you can do about it #bizchatsMoney MillennialA8. It's very simple...pay your bills on time, don't apply for credit excessively and keep your credit card balances to a minimum. #BizChatsJohn UlzheimerA8. Be patient. Improving your credit health is doable, but it often takes time. #BizChatsCreditKarmaA8) Pay more than minimum to cut debt load, boost credit score AND avoid extra financing charges. #bizchatsLauren YoungA8: Be proactive, not reactive. Find out your score today so you can get it in best shape possible ahead of time. #bizchatsFarnoosh Torabi@mashbusiness A8: Take credit only when needed and don't charge up too much on the credit card. Lower, the better. #bizchatsWayne ChanA8: Use large chunks of cash, like a tax refund, to pay off #creditcard debt http://t.co/t06AXHnYW0 @johnulzheimer #BizChatsCredit SesameA8) Put those bills on auto payment, so you don't miss a billing cycle! Very simple. Very easy. #bizchatsLauren YoungA8 #BizChats: Be disciplined! Stay on top of your bills, credit score and everything. #Discipline takes time, it won't come over night.Douglas A. BoneparthA8. And if you don't know what your credit score is, as of no more than 30 days ago, then you're missing out. #BizChatsJohn UlzheimerA8: The lower your credit card debt, the higher your #creditscore http://t.co/t06AXHnYW0 @johnulzheimer #BizChatsCredit SesameA8. and be careful whose advice you take. Lots of garbage on the web. #BizChatsJohn Ulzheimer@mashbusiness A8. Pay your bills on time and in full amount. Don't take on more than what you can pay off monthly. #BizChatsMilapClosing Comments: Thank you for joining today’s #BizChats! Special thanks to all of our experts: @FARNOOSH, @johnulzheimer, and @LaurenYoung!Mashable BusinessThanks for the great #bizchats on #credit & #debt. Great questions!Farnoosh TorabiThanks, @mashbusiness! #bizchatsLauren Young@mashbusiness @FARNOOSH @johnulzheimer @LaurenYoung I am happy to join in. Have a good day and looking forward to the next one. #bizchatsWayne Chan