What Credit Score Do You Start With?

what credit score do you start with

When embarking on your personal finance journey, the idea of a credit score may seem confusing. Your credit score has a large impact on your financial and lending future.

What credit score do you start with when establishing your credit?

Keep reading to learn all about credit score, your starting score, and how to build your score from scratch!  

What is a Credit Score?  

First things first, what is a credit score? And why is it so important? 

Simply put, a credit score is a number that reflects the financial trustworthiness of an individual. The more likely a person is to pay back borrowed money, the higher their score will be. Credit scores can range from 300 to 850, which is considered perfect credit.  

Here’s what each credit score range means: 

  • Excellent: 800 – 850
  • Very Good: 740 – 799
  • Good: 670 – 739
  • Fair: 580 – 669
  • Poor: 300 – 579 

How Are Credit Scores Calculated?

Credit reports provide data about a person’s financial history. Five key components are used to determine a person’s credit score:

  1. Payment History: Lenders want to ensure a borrower is reliable and on time with payments. This area of the credit report displays whether an individual consistently pays credit bills on time or if they make late payments
  2. Amounts Owed: This is also known as credit utilization. It looks at how much credit is available to a person and how much of it that person is using. 
  3. Credit History Length: This examines how long each credit account has been open and how long it has been since each one was utilized. It can provide a longterm picture of a person’s financial habits. 
  4. New Credit: This metric looks at the number of accounts a person has recently opened as well as those they have applied for. Opening many accounts in a short time frame can signal that you are a risk to lenders. Therefore, those with a short credit history should avoid doing this. 
  5. Credit Mix: Credit mix refers to the different types of credit you have taken out. Student loans, mortgage payments, and auto loans are some examples that get factored into the mix. If you do not have a long credit history, the credit mix will be given more weight in determining your credit score.   

What Credit Score Do You Start With?

So, what credit score do you start with? It’s actually none at all. Credit scores are based on reports from credit bureau data. Thus, they can’t generate a score for someone who has never had credit. Until you’ve had some form of credit in your name for at least six months, you will not have a score. 

Having no credit score may sound harmless. However, this can impact you negatively as lenders have no way of measuring your risk. Without a credit score, you will likely pay higher interest rates, or you may even get turned down for loans altogether. 

But there’s good news! Having no credit is better than having bad credit. You have a blank slate and a foundation upon which you can build good credit.    

To obtain a credit score, you must open up a line of credit in your name. Once you pass that initial six month period, credit bureaus have enough information to generate your starting credit score. Your first score will depend on the five factors mentioned above. This means the way you handle your credit is pivotal in setting yourself up for a good credit score. 

It is very rare to begin with a low credit score. Nevertheless, certain practices can send the wrong message to lenders and weaken your initial score. On the other hand, prudent financial moves can help increase your score.   

Read on to discover best practices for building a great credit score if you’ve never had credit.  

How To Build Your Credit Score From Scratch

There are some simple ways you can build good credit fast, so you are more trustworthy to lenders. For example, make all your credit card payments on time and use less than 30% of your credit limit. Here are some other tips to help build your new credit

  1. Apply for a secured credit card. A secured credit card requires a cash deposit when the account is opened. The amount you put down will typically equal your credit limit. If you pay your credit card bill on time each month, you’ll get that deposit back. If you do not, the lender can withdraw the money from your account. Simply pay your bill on time each month to build credit.   
  2. Get a Cosigner. Another way to maintain a good credit score is to ask a financially responsible adult to cosign for you when you take out a loan. A cosigner will take the brunt of the financial burden if you are unable to make payments. This option allows you to pay lower interest rates and apply for cards that may have turned you down had you applied without a cosigner.
  3. Landlord Reporting. Do you pay rent on time each month? This can show lenders how responsible you are. You can request that your landlord report your payment history to credit agencies. This is a great option to begin building credit without applying for a loan or card. 

Want to Learn More About Building Yout Credit Score?

Establishing and building credit is not as intimidating as it first appears. Slowly but surely, you can build a great credit score. Need more advice?

Check out this beginner’s guide to credit to navigate the world of credit with confidence!

Go Clean Credit is committed to helping individuals restore their credit and pursue their financial goals. Since 2003, Go Clean Credit has helped thousands repair credit issues and build up low credit scores. 

Go Clean Credit realizes how stressful and challenging credit problems can be. That is why they offer support from credit specialists who are knowledgeable and well versed in the industry. 

If you need aid, don’t hesitate to contact the dedicated professionals at Go Clean Credit!  

How to Use a Credit Card to Build Good Credit [2019 Guide]

how to use a credit card

If you are like most Americans, you already have a credit card or are planning to get one. However, the way you handle your credit card will have a huge impact on your credit score. If your credit score drops, you will have higher interest rates on your loans. Or worse, you won’t qualify for loans at all. 

That’s why we’ve prepared a guide that will help you learn how to use a credit card so that it increases your credit score. In the article, we will cover the following:

Keep reading to learn more!

The Comprehensive Guide on How to Use a Credit Card to Build Credit

The Right Way to Use a Credit Card

If you do not use a credit card correctly, your credit score could drop. Therefore, we have some helpful tips that are sure to help you use your credit card in a way that will improve your credit score. 

Firstly, try to use your debit card or cash whenever you can. Even small transactions on your credit card can add up, resulting in a large monthly payment. The more you use cash, the more likely you will be able to keep debt to a minimum and your credit score high.

Note: A good rule of thumb is to only use your credit card for things you need, not the things you want. In other words, if you go on a shopping spree, use your debit card; if your car needs maintenance, use your credit card.

Secondly, never miss a payment. At the end of every month, it’s important to at least make the minimum payment. If possible, pay off the entire balance. If you make a late payment or miss one, it can lower your credit score by 50-75 points! Consider setting up autopay if you tend to forget to make those monthly payments.

Lastly, never go over your credit card limit. If you spend even a penny over your limit, your score can drop by 40-50 points! This point difference is staggering, especially if you plan to buy a house or car soon. 

How Many Credit Cards Should You Have to Get Good Credit?

Most Americans have three to four credit cards. However, depending on your circumstances, you may prefer to have more or less. So what are the pros and cons of having more than one credit card?

Pros of Having More Than One Credit Card

Keeping multiple credit cards allow you to spread outstanding balances. In effect, you’re less likely to reach your limit on one or more accounts. In other words, having more credit cards will give you leeway and flexibility. It’s usually a good idea to have a backup credit card in case your usual card is not accepted or is lost or stolen.

Moreover, different credit cards offer rewards. For example, one card may offer points for hotels or airline miles. Another card might give you cashback on groceries or gas. No one card will give you all the rewards, so having multiple cards might benefit you. However, don’t gravitate toward cards just because of their benefits. Consider whether you’ll use the credit card benefits or if they’re just a nice perk.

Cons of Having More Than One Credit Card

First, it’s not always easy to keep track of spending and payment due dates with multiple cards. For instance, it can be easy to forget how much you’ve spent on each credit card amount.

As mentioned, if you go past your limit, your score could be damaged. Likewise, if you lose track of the payment date, you may miss a payment deadline. The result is a damaged credit score! So if you have a hard time sticking to budgets or juggling too many due dates, acquiring multiple credit cards may not be for you.

In the end, try to keep your credit utilization ratio to 30% or less. In other words, if you are spending more than 30% of your total available credit on each card, you have a greater risk of damaging your credit score.

Note: It’s usually not a good idea to have store credit cards. For one, they increase the temptation to go on more shopping sprees. Moreover, store credit cards also decrease the age of your overall credit history, ultimately lowering your score. The high-interest rates are simply not worth it. 

So, How Many Cards Should You Have? 

The answer depends on your circumstances. However, as long as you make payments on time and don’t pass your limit, your score shouldn’t be negatively affected.

What’s the Best Way to Pay Off a Credit Card Balance?

When learning about how to use a credit card, it’s important to know the types of repayment methods. Basically, there are a few strategic ways to pay off your credit card balances. Listed below are two techniques to successfully pay off a credit card balance:

  1. The Snowball Method. It involves paying off the smallest balances first. After it’s paid off, you move to the next highest balance. If you have a lot of debt on different credit cards, this method may work best. 
  2. The Avalanche Method. With this method, you pay off the debt with the highest interest rate first. If you have high interest accruing on certain accounts, this method may work best. 

As you start making these payments, it’s always best to pay more than the minimum whenever possible. Why?

When you pay more than the minimum, you decrease the amount of interest you pay over time and pay off your debt sooner. Moreover, your credit score can drastically improve as you pay off your debt. Lastly, having little to no credit card debt makes it easier to make large purchases, such as buying a home or car. 

How to Choose a Credit Card

Before deciding on a card, check to see if there are annual fees, what the APR amounts to, if the card is accepted at your list of frequently shopped stores, and how the benefits measure up to the costs of the credit card. Why? You need to learn how to use a credit card that you plan on using.

Cards with Perks

As noted, some credit cards offer rewards or extra perks. While this might be a great benefit for some, it’s important to ask yourself whether or not you plan to actually use those benefits.

Spending hundreds each month to collect a reduced airfare or a free concert ticket once in a blue moon may not make sense for your budget. Do your research and don’t let a credit card’s marketing ploy win you over.

Credit Cards with an Annual Fee

If it sounds too good to be true, it probably it! Cards that have amazing rewards, low-interest rates, and superior payment options likely has an annual fee.

Should you get a credit card with an annual fee?

When you’re looking at a credit card with an annual fee, take a look at what benefits they offer and compare the cost to what you’ll get. Is the annual fee too high for what you’ll be getting? If so, that credit card might not be worth it. Ask yourself if you will actually use those benefits, if there are any hidden fees, or if there are better deals out there. 

Credit Cards from Unions

Banks aren’t the only institutions that offer credit cards. If you’re not having much luck getting approved for one, consider credit union credit cards. They offer more chances to get a credit card that can potentially make it easier for you.

Should you get a union credit card? 

Credit unions are member-owned nonprofits. As a result, when you get a union credit card, you generally get a more personalized experience. Additionally, credit unions offer low-interest rates and flexible repayment methods.

Nonetheless, there are a few things that you should scrutinize. Credit union has specific entry requirements. When you join a credit union, all your accounts are tied together. And, credit unions are easily affected by local problems in the community.

In the end, the type of credit card and where you get it depends on your unique situation.

Need to Repair Your Credit?

Now that you know all about how to use a credit card, it’s important to note that it’s are a great tool for preparing yourself for greater investments down the road, like purchasing a car or house. Nonetheless, if used irresponsibly, it can harm your future buying power.

If your credit score isn’t where it should be because of credit cards, contact Go Clean Credit. Go Clean Credit is a top credit repair company in Arizona that is passionate about getting you on the road to success. Over the last 15+ years, this credit repair company has helped thousands of people reach their financial goals.

Contact Go Clean Credit today to learn more about how they can personally help you!

How Does Credit Work: The Beginners Guide

how does credit work

Borrowing money enables people to make purchases without paying cash. Buying a home, purchasing a car, or taking care of smaller day-to-day expenses are just some of the things people use credit for. However, credit works similarly to loans and must be paid back in full. One major difference between a loan and a credit card is that the cardholder chooses how much to spend their money on, and then they must pay back the amount spent. On the other hand, loans are a fixed amount of money that is repaid over a selected amount of time. So how does credit work?

A credit report thus tracks whether a person is reliably paying off his or her debt when payments are due, or if s/he fails to make the payments on time. Most individuals who have student loans, have purchased a home or car, and/or have used a credit card have a credit score. Essentially, your credit score communicates to lenders how likely you are to pay back your debt, as well as how likely you are to pay it back on time. So now you know what it is, you’ll want to know the answer to the question of how does credit work?

Why is it important to know your credit score?

A good credit score can make it possible for you to receive better terms and conditions when taking out a loan. Additionally, it may even impact the interest rates of those loans. Therefore, it is important to know what your credit score is, as well as understand what it means.

  • Excellent credit: 750 and above
  • Good credit: 660-749
  • Fair credit: 620-659
  • Poor credit: 619 and below

An excellent credit score gets you the best financing terms available when you borrow money. For example, if you are buying a house with an excellent credit score, you will qualify for the lowest interest rates out there. In the span of a few years, the low-interest rates can save you thousands of dollars.

With a good credit score, on the other hand, interest rates will be a little higher if you wanted to borrow money. It might be a good idea to try and repair your credit score before taking out any loans.

Bad credit can make it difficult to qualify for many loans. Though there are loans available for people with poor credit, the interest rates can be very high. Luckily there are things you can do right now to help you raise your credit score! For example, you can pay off debt, ensure payments are made on time and use your credit. If you use your credit and then pay it off on time, you can actually raise your score.

Where can you find your credit score?

If you don’t know what your credit score is, don’t fret. There are a number of places where you can find your credit score. You can check with your credit card holder, use a credit score service, or use a variety of other options.

If you discover your score isn’t what you want it to be, contact Go Clean Credit. We know it can be scary to have poor credit, but we are dedicated to helping people raise their score in a way you can trust.

You’re an Adult! Here’s How to Build Credit at 18

how to build credit at 18

Adulting is hard. If you haven’t already, you have to find a job, enroll in college, and basically figure out what you want to do for the rest of your life. There will never be a more exciting time, however stressful it may be. One of the most important things to be aware of as an adult, however, is your credit score.

Your credit score is a number that basically measures how responsible you are when you borrow money. It will communicate to lenders how likely you are to pay back the money you borrow, as well as whether or not you will pay it back on time. Essentially, this score can impact how much interest you will pay when you take out a loan. Over time, that interest can cost or save you thousands of dollars. A low credit score can have negative consequences.

Basically, if you want to buy a house, a car, or other important things people do in the adult world, you will have to start building your credit now. Below is a list of ways that will explain how to build credit at 18.

Easy Ways to Build Credit at 18

Become an Authorized User

One of the easiest ways to build your credit score is to piggyback off of someone you know. For example, your parents can add you as an authorized user on their credit card. This means that as long as the cardholder makes regular payments on their card, you get to benefit from their credit score even if you don’t use the credit card.

However, if the family member or friend you are listed under makes irregular payments -or worse, doesn’t make payments at all- your credit score will be negatively impacted. On the other hand, if you are doing a poor job of paying back the borrowed money, your friend or family member’s credit score will likewise drop. In other words, be mindful of who you decide to be an authorized user with.

Get a Credit Card

One of the simplest ways to build your credit score right now is by getting a credit card. As long as you pay off the card in full at the end of every month and pay it on time, you can easily boost your credit score.

However, as an 18-year-old, it can be difficult to qualify for a credit card. Luckily, there are some starter credit cards for people with little to no credit history.

Take Out a Student Loan

Are you going to college? If so, you might have to take out student loans. Though the thought of borrowing money might seem frightening, don’t despair! Student loans don’t need to be paid back until after graduation and they are a great way to start building credit.

Essentially, people with a long credit history get a boost in their credit score. Whether you work to repay loans while you are still in school or wait until after graduation, student loans usually have a long repayment period, which can positively impact your score over time.

Just beware. If you default on your loans, fail to make payments, or make late payments, you will negatively affect your credit score.

A Routine of Good Habits

In the end, the best way to build credit is by making good habits now. Whether you decide to get your own credit card, become an authorized user, or take out a loan, make all of your payments on time. Additionally, make sure not to use your credit card too much. In other words, only use about 30% or less of the maximum credit amount you are allowed to spend. Lastly, limit the number of credit accounts and loans you take out. Too much borrowed money can lead to debt, late payments, and they can negatively impact your score.

Congratulations! You are adulting!

You can build a great credit history just by learning how to build credit at 18. When you have excellent credit, you will receive the best deals in life when it comes to borrowing money. On the other hand, if over the years your credit score drops, there are services available that will help you bounce back. Go Clean Credit is a great service that helps individuals with bad credit improve their scores. If you are worried about your score, contact them today!

Can a Credit Card Grace Period Help You Save On Interest?

Can a Credit Card Grace Period Help You Save On Interest With credit cards, interest is a constant shadow that looms overhead. Just the thought of having even a slightly higher payment for the month is enough to bring any cardholder down. Thankfully, a credit card grace period could help you avoid interest and save money.

Can a Credit Card Grace Period Help You Save On Interest?

Credit cards are not required to have a grace period, although almost all of them do. Credit cards that do have a grace period are required to send their cardholders a statement at least 21 days before the closing date.

What is the grace period?

A credit card grace period is the time between the statement closing date and its due date. During this time,  if a cardholder is able to pay their balance in full and on time, they will avoid interest charges.

How does it work?

Basically, cardholders are accruing interest on all of their purchases, but they don’t see those charges if they pay their balance in full during their grace period. However, if they make a payment that’s less than the balance, they will see the interest. When someone doesn’t pay their balance in full, they will be charged interest on their average daily balance going back to the start of the statement.

What if the grace period isn’t used?

If a person is to leave even just $1 unpaid, it will start to accrue interest during the next billing cycle. On top of that, any purchase made will now immediately have interest charges added on to it. If you do lose your grace period, some cards require that you make two full payments to reinstate it. Carrying a balance can also leave you subject to trailing interest, or “residual interest.” This type of interest can build up on your balance before you have a chance to pay it off. Even if it says you’ve paid in full, you could still have residual interest looming on your balance.

How to best manage a grace period

Know the statement closing date

Knowing the statement’s closing date makes it easier to know when it’s best to make payments. Make purchases just after the closing date, as opposed to just before. This allows for more time to pay off the balance.

Get grace period back as quickly as possible

If a grace period is lost, it’s best to get it back as soon as is possible for the cardholder. To do this, they should make a payment to cover the entire balance. Unfortunately, this won’t affect the interest already accrued, but it can make future purchases eligible for the grace period again.

Maintain grace period on some cards

Sometimes a credit card has to hold a balance. When that happens, leave that card for balances that are going to have to be carried over. Have other cards that will be paid in full each statement. Do you have any questions regarding the credit card grace period and how you can use it to your advantage? Let us know. We’re here to help.
No matter what your situation, Go Clean Credit has a solution. We have many credit repair programs that are available to help you overcome your credit situation and place you back on the path to financial success. Real credit restoration is not a once size fits all model and we tailor your needs to the right program, but most people can start for just $99 per month. We have fixed price programs that get you back on track in as little as 5 months, debt resolution solutions, programs geared toward people who have had recent short sales or foreclosures and many others. Help is just a free phone call away, or you can fill out an appointment request. Contact Go Clean Credit to schedule a free consultation today.

Can You Close a Credit Card Without Hurting Your Credit Score?

Can You Close a Credit Card Without Hurting Your Credit Score

Before you snip that card in two, understand that there is more to closing a credit card. If you’re looking to close a credit card without hurting your credit score, think about these important aspects to do it right.

Can You Close a Credit Card Without Hurting Your Credit Score?

Should you cancel your credit card?

Although you may want to cancel that credit card, you have to ask yourself if you should. Eliminating one more source of fees that you don’t need sounds great, but it might not be the best move.

  1. Canceling a card could help you avoid annual fees or high interest rates.
  2. Closing a card could reduce your available credit and average age of your accounts, therefore decreasing your credit score.
  3. You may need to open a new card before you close another.

Reasons to cancel your credit card

There are many valid reasons to cancel a credit card. Perhaps you don’t want to be tempted to spend excessively or the terms of your card are no longer friendly. Essentially, you cancel cards that are unnecessarily costing you money. Before closing your account, though, you can request a lower interest rate from the card issuer. However, they may not respond favorably. Annual fees are often a reason to cancel a card, especially if the issuer won’t waive the fee. Opening a new credit card can also be a good reason to close one of your other cards. This is only a good idea if you get a great deal when you sign onto the new card.

Understand that if you’re closing a card to try to help your score, taking all the right steps doesn’t necessarily mean your score will improve right away. Payment information may stick around for a while. So if you had some late payments on the now closed card, they won’t just disappear.

The impact of canceling a credit card

Potential lenders look at your credit utilization ratio. Included in the ratio is how much credit is in use and how much credit is still available. So, if you cancel a card with a high limit, it will significantly affect your ratio. In turn, it could hurt your credit score. Your score is especially at risk if you have high balances on other cards. To make sure closing one account doesn’t impact your score, pay off the balances on all other cards. Zero balances means a credit utilization ratio of zero, so you won’t feel the hit of the loss of a balance.

You also need to consider the age of your accounts. Old credit is good. If the account you want to close is older, it will decrease the average age of your credit and be potentially harmful to your credit score. Closing an older account could have a negative impact on your score.

Do you have any questions about how to close a credit card without hurting your credit score? Give us a call at 1-866-991-4885.

No matter what your situation, Go Clean Credit has a solution. We have many credit repair programs that are available to help you overcome your credit situation and place you back on the path to financial success. Real credit restoration is not a once size fits all model and we tailor your needs to the right program, but most people can start for just $99 per month.

We have fixed price programs that get you back on track in as little as 5 months, debt resolution solutions, programs geared toward people who have had recent short sales or foreclosures and many others. Help is just a free phone call away, or you can fill out an appointment request. Contact Go Clean Credit to schedule a free consultation today.

Tricks To Paying Off Credit Cards With High Interest Rates

Tricks To Paying Off Credit Cards With High Interest Rates

Paying off credit cards with high interest rates can be extremely difficult. The finance charges essentially take over your minimum payment each month so you barely get anything paid off. That’s at least what it feels like. Although they don’t all involve paying off your highest debt first, here are some tricks to paying off credit cards with high interest rates that you can try.

Tricks To Paying Off Credit Cards With High Interest Rates

Ask for a lower interest rate

Creditors are sometimes willing to give you a lower interest rate if you’re a good cardholder. If you’ve made all of your payments on time or only had one or two late payments, then it’s likely they’ll give you a break. Also, if you have offers for lower interest rates from other credit cards, you can use that to bargain with your creditor.

Transfer the balance to a lower interest rate card

Having it at a lower interest rate might just be what you need to get the debt paid off. And if you have great credit, you could qualify for a good balance transfer interest rate. Don’t only look at balance transfer credit cards, though. Consider rewards credit cards too, because they have some of the best balance transfer rates. If you don’t have enough available credit to move the entire balance to another card, don’t worry, even moving just part of the debt will help a lot.

Tackle smaller debts first

Maybe paying your bigger debt first isn’t the right plan for you. If you instead pay off smaller debts first, that would free up money that you could put toward your larger debt. Start by making a list of your debts, and as you pay them off, take those payments and put them toward the next one on your list.

Pay as much as you can

When interest is high, a lot of your payment is going to that, so you have to try to pay a little more each month to actually make a dent in the amount that you owe. One tactic to consider here is paying the minimum on all the lower interest rate debts and putting all your extra money into your higher interest rate debt. Then, once you’ve paid off that debt, you move on to the debt with the next highest interest rate and continue until you have paid off all your debts.

Cut expenses

Is there anywhere in your day-to-day life you can cut back? Maybe you can eat out less, stop for coffee only two mornings a week, or cut back on the tv channels you’re paying for. Cutting out expenditures that you don’t absolutely need could get you some extra cash to pay off that huge debt that’s hanging over your head. Then, once you’ve paid it off, if it’s in your budget, perhaps you can add everything back in.

Wait a few months

Sometimes it just has to be this way. If you absolutely cannot find any extra cash to put toward your goals of getting rid of your debt, then hold off until you have some. Continue to make the minimum payments on all of your credit cards and pay a little more when you can.

Do you have any questions about paying off credit cards with high interest rates? Let us know! To enlist the help of a trustworthy, effective credit repair company, call us today at 1-866-991-4885!

No matter what your situation, Go Clean Credit has a solution. We have many credit repair programs that are available to help you overcome your credit situation and place you back on the path to financial success. Real credit restoration is not a once size fits all model and we tailor your needs to the right program, but most people can start for just $99 per month.

We have fixed price programs that get you back on track in as little as 5 months, debt resolution solutions, programs geared toward people who have had recent short sales or foreclosures and many others. Help is just a free phone call away, or you can fill out an appointment request. Contact Go Clean Credit to schedule a free consultation today.