Attention Millennials: Viewing your credit report and improving your score

Posted on Apr 7th, 2015 | Credit, Debt

If you feel like you’re the only Millennial with financial problems, know you’re not alone. In fact, 42 percent of Millennials say that debt is their "biggest financial concern". Additionally, half of college grads still rely on their family for financial support.

Not exactly a pretty set of numbers, huh?

Take a deep breath, and take a closer, more honest look at your finances. Let’s start with your credit report.

What’s a Credit Report?
A credit report is a snapshot of your debt at a certain point in time. It states how much debt you have, how often you pay this debt on time, the names of the creditors collecting your debt, the amount of debt past due, etc. (See sample credit report here.) This report is compiled by the Big 3 credit bureaus, namely Equifax, Experian and TransUnion.

To get a complete picture of your debt, it’s best to get a credit report from all three. Each gathers credit information from different sources so they’re bound to produce conflicting reports. You’d probably want to take the most conservative view on your report, because it’s the basis for the number that’ll make or break your credit standing: your credit score.

What’s a Credit Score?
If a creditor wants to check whether you’re "credit-worthy" or not, the first thing they’ll look at is your credit score. This score is calculated from the following information on your credit report:

  • History of payments
  • Type of credit
  • Total money owed
  • New credit
  • Credit history length

How Can I Improve My Credit Score? 
There’s no magical trick that’ll wipe out your debt overnight, but you can try these tips on for size:

  • Pay off your short-term debts first. These may seem small, but those nasty little buggers known as "interest" can pile up over time and do a number (no pun intended) on your bank account. If you can eliminate credit card debt — or any short-term debts — as soon as possible, you’ll find it much easier to take on the long-term ones.
  • Make an expense report. Take all your receipts, invoices and the like from previous months, and make a report. Tools like excel sheets or Google Docs help to organize your financial information.
  • Create a budget. From your expense report, decide what you can cut or eliminate. To help you figure out an upper limit for your expenses, deduct your target monthly savings from your monthly income. If the resulting number is too low for you, you have two choices: lower your target monthly savings, or cut down your average monthly expenses.
  • Lower monthly expenses. Managing debt when household expenses are through the roof can seem like an impossible task. Take a close look at your monthly bills and see what you can cut. Lose the cable and switch to Netflix. Check out what type of discounts you can apply to your car insurance. Many providers offer deep discounts for being a good driver or keeping your miles low. By keeping your monthly expenses as low as possible, you can apply those savings toward bringing down your debt.

Keep at It
Don’t be discouraged if you’re not seeing immediate, significant results to your efforts to improve your credit standing. Having a patient mindset and paying your debts on time is the key to turning your credit around.

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