How to Fix Credit When on Social Security
Social Security has been called the “most successful anti-poverty” campaign in the history of the United States. 1 in 5 Americans receive a benefit of some kind, and that includes over 47 million retirees and dependents
It’s a great help if you need it, but even with support from Social Security, many people still find themselves with more debts and financial obligations than they can handle, and this serves to drag their credit scores into the doldrums.
When you’re on a limited income and relying on government support, clearing those debts and improving your score can seem like an impossibility.
But there are a few tips and techniques that you can implement, and that’s what we’ll look at here.
1. Speak with a Credit Expert
It’s easy to feel overwhelmed by credit issues. Many consumers don’t fully understand how their credit scores are calculated or even why their scores are low, and rather than facing the issue and tackling their problems, they bury their heads in the sand and make the situation worse.
Gain some clarity and mental strength by speaking with a credit expert. Not only will they provide you with some much-needed support and peace of mind, but they can also advise on the best course of action.
Senior Coverage is a referral service that connects consumers to a series of trusted credit experts. These affiliated companies are trained to deal with low-income borrowers and can help people in many different circumstances.
You can contact one of Senior Coverage’s advisors for a no-hassle, no-obligation, 100% free consultation.
Dial 1 (888) 479-1792 today to start your journey.
2. Check Your Credit Report
You are entitled to one free credit report a year from all three credit bureaus. Some services will try to charge you an extortionate fee for this service and some of them offer helpful add-ons that make them worthwhile, but when you’re on a tight budget you need to save every cent.
Look for any inaccuracies, obsolete items, and mistakes that shouldn’t be there. These items can have a seriously detrimental effect on your credit score, and it doesn’t cost you anything to report them and remove them.
This is actually one of the first tasks on the agenda for Senior Coverage’s trusted providers. They are experts in disputing negative items and can remove these much quicker and more effectively than you can remove them yourself.
3. Pay What You Can
Every time you make your monthly credit card payment, you’re hitting your interest targets for that month. In fact, most of your payment is interest, with only a small percentage going toward the principal.
If you increase this payment, that extra cash will go toward your principal, allowing you to clear your debt much sooner.
The less debt you have on file, the higher your credit score will be.
It all comes down to something known as your credit utilization ratio which compares your total credit (i.e. the limit on a credit card) to your used debt (i.e. the balance on a credit card).
As you reduce your debts, this ratio will fall, and as it counts for 30% of your total credit score, you’ll also see an improvement there.
4. Increase Your Credit Limits
Paying down debt isn’t the only way to improve your credit utilization, you can also increase your credit limits. This is much easier for seniors on Social Security, as it doesn’t require any additional funds.
A simple phone call is all it takes to increase your credit card limit and providing your cards are not maxed out and you have been making your payments on time, your lender should be fairly receptive to this idea.
4. Avoid New Accounts
As tempting as it can be to open new credit cards and acquire new loans, these will have a seriously detrimental effect on your credit score.
Those applications are recorded as hard inquiries, shaving up to 15 points from your score. When the account opens, the average age of your accounts will drop, and you’ll also be hit with a new credit penalty.
5. Pay on Time
Finally, and most importantly, make all of your payments on time and in full. Your payment history accounts for 35% of your total credit score and the only way to build it is to avoid any late payments.
Even if you have missed a payment or two, it might not be the end of the world, so don’t panic just let.
Payments don’t show as being late until they are 30 days overdue, and even then, there are still several stages and it’s best to make that payment as soon as you are able.
Questions? Call 1 (888) 479-1792