Bankers advise making minimum payments, always staying in touch

Whether it is buying a home, a car or applying for a loan, credit is what makes or breaks the deal. These local bankers gave some tips to ensure that anyone who wants to increase their credit scores for a New Years resolution can do so.

Carolyn Graham of Southern Independent Bank said that people need to make all of their payments on time.

“Even with credit cards, just make the minimum payment,” Graham said. “Do not be 30 days late. Most of the minimum payments are low, so just try to at least make the minimum payment.”

She said that many creditors have a department that will help the customer with payments if they get behind.

“It is really important that you call your creditor before it is past due and you know that you’re going to miss a payment,” Graham said. “Many financial institutions have departments that will work with you if you are going to have a late payment. That doesn’t mean that it won’t show up on your credit report, but they can help you through it.”

Graham said that she usually sees people overextend themselves when it comes to credit.

“The way the financial world is now, people receive all of these credit card applications and when you fill those out, to the credit bureau it looks like you’re getting credit everywhere,” Graham said. “They are so easy to use and so next thing you know, you have overextended yourself. Pay your revolving lines off, pay your bills or pay a month ahead to get ready for summer.”

When people come in in search of financing for a home or a car, Graham sees that they have overextended themselves on unsecured credit.

“This unsecured credit was usually mailed to them, or when you get a credit card from a retail store and they say, ‘Oh, you’ll get 25 percent off today if you open a credit card.’ You can use that credit card anywhere, but don’t get caught up in those. You will find yourself paying up to $500 to $600 to seven or eight different places, just from those cards.”

Graham said that when it comes to bad credit, it takes time to correct.

“Bad credit takes a lot of time to correct and it keeps you from getting you what you need,” Graham said. “You don’t want to start out with bad credit. It is a lot harder to dig out of bad credit than it is to establish credit.”

She has noticed that people are starting to become more aware of their credit score.

“Credit scores are key,” Graham said. “People need to be mindful of their credit score. I’m finding that more people are aware of their credit score, because of their credit card statements. That is helpful to us when people are mindful of their credit scores.”

Hunter Harrington of CCB Community Bank said that people need to make sure they know what their credit score is.

“The first thing that I tell people is to make sure they know what is on their report,” Harrington said. “You can’t really fight it unless you know what is on it.”

He also said that people need to make sure they know how credit scores are derived before they try and tackle the problem.

“I think it is imperative that you know how to derive your credit score,” Harrington said. “Typically it is based on your length of credit, your revolving credit balances and then anything that is reported negatively to the credit bureau, such as late payments, collections or judgments. To know how your credit score is derived is also important in fighting to improve your credit score. One of the biggest things that I see most often is late pays and medical collections.”

The old saying, “bad credit is better than no credit,” could be true at some times according to Harrington.

“It can be true,” Harrington said. “Because I like to believe that, especially us, are able to time to time, overlook bad credit, because bad credit can come during a time in your life when there is a legitimate hurdle. If you have 10 years of good credit history and then you have one bad year, but you kept these people afloat and kept going, that to me speaks more volumes than somebody who has never had credit, or somebody who has bad credit because they have never paid a payment on time. On the flip side, if you have had bad credit for five years and never made a payment on time that could be worse than somebody who has no credit.”

Harrington said that starting small is another important thing when it comes to improving credit scores.

“For someone who has bad credit or if they want to start working on their credit, even if you start small and then work big, it can have huge effects on your credit score,” Harrington said. “You could start paying some small judgments or small collections and it will have some big effects on your credit score. Even it seems so insurmountable to concur all at one time, I’d still recommend taking it one at a time. There is no better time to start working on it than now.”