Credit Help!

If your credit score is holding you back from getting the bike of your dreams, here are some tips on how you can build your score and achieve your dream of owning a Harley-Davidson! Please note that every situation is different, and Timber Town Harley-Davidson cannot be responsible for your results. However, during my time in the consolidation industry, I found the advice below to be effective for most people. If you have any questions, please feel free to email me at justin.mccreery@salemharley.com.

Wishing you the best,

Justin McCreery

Sr. Business Development Manager, Timber Town Harley-Davidson, Certified Debt Specialist, IAPDA, International Association of Professional Debt Arbitrators.

Types of Credit:

Unsecured: these are accounts not secured by specific assets, e.g. credit cards, personal loans, store cards, etc...
Secured: these are accounts secured by assets (“collateral”) that can be repossessed if the loan defaults. These include loans for your bike, car, mortgage, etc...

What Makes a Credit Score?

Payment History:

Makes up 35% of your overall score.
Do your best to make every payment on time and make as many full payments as possible.
Many consumers pay a small amount on each card, however, doing so will not help your score. Partial payments are still considered late payments and reflect negatively on your report.
Make sure you pay your secured accounts first! Delinquencies on secured accounts can lead to repossession or foreclosure. This will only make things harder!
==>>If you currently own a motorcycle, good payment history with your lender is extremely helpful when trading up!!!

Credit Utilization:

Makes up 30% of your overall score.
Credit utilization is the revolving credit you’re currently using divided by the total amount of revolving credit you have available.
For example: if you have used $3,500 on a card with a $5,000 limit, and owe $2,000 on a $3,000 personal loan, your utilization would be 68.75%. This is calculated as ($3500+$2000) ÷ (5,000 + 3,000).
Your ideal credit utilization should be between 10-20%.

Length of Credit History:

Makes up 15% of your overall score.
Most consumers think this applies to keeping an account open for an extended period, however, that’s not really the case today. The credit bureaus understand that the credit card industry is competitive, and consumers no longer have as much brand loyalty. It’s expected that a consumer will periodically switch cards as their situation changes. **Please note, applying for new credit cards will cause a “hard inquiry.” Hard inquiries are specific requests to credit bureaus for reports on your credit, which usually require your social security number. These have a negative impact on your score, so I recommend only applying for cards that offer lower interest. I’d also read through the requirements for qualifying before applying. You can then go on Credit Karma to see if you’re where you need to be (See below for more information on Credit Karma. CK does not run hard inquiries and it’s free!).

New Credit:

Makes up 10% of your overall score.
Credit card companies like to see that you’re in control of your credit. If you’ve applied for several loans in a short period of time, this is a red flag to lenders.
Most applications for new credit will cause a hard inquiry, which lowers your score.
Please note “Soft credit inquiries” such as those we use in our Shop By Payment feature on our website do not require your social security number and do not negatively affect your score.

Credit Mix:

Makes up 10% of your overall score.
On average, the credit bureaus like to see consumers with 1-3 secured accounts (car, motorcycle, home, etc.) and up to three unsecured accounts (credit cards, unsecured personal loans, etc.).
You don’t need to have all the different types of loans but at least a bike/car payment and credit card are a great start!

What hurts your score:

Missing or late credit card or loan payments
Maxing out cards
Hard Inquiries
Applying for too many loans/credit cards
Accounts in Collections
Foreclosure
Being an authorized user on a bad account
Using only one type of credit card
Having too many unsecured accounts

What improves your score:

Making payments on time.
Paying off small unsecured cards and anything in collections.
Keeping balances between 10-20% on all cards
Making full payments on accounts instead of partial payments.
Getting credit for making utility and cell phone payments on time.
Experian offers a service where they look through your accounts to identify utility and telecom payment history. After they confirm whether transactions are beneficial, you can have your history applied to your score! Visit: https://www.experian.com/. There should be a banner at the bottom asking if you want to learn more.
Becoming an authorized user on a responsible person’s account.
The account holder can add you and not have a card issued.
If they make their payments on time, you will get credit! Make sure they’re making payments on time though. If they make payments late, that will negatively impact your score.
Create a free account with Credit Karma at www.creditkarma.com. Credit Karma is a free service that provides consumers with a rough estimate of what their average credit score is. It also lists your current and past-due credit accounts. Check your Credit Karma report and see If you have accounts in question. If you do, dispute them. Incorrect information can hurt your score but fixing errors can help give your score a boost. First, contact the credit companies to cancel the accounts. You will then need to call each credit agency directly to dispute the accounts.
Unfortunately, their systems don’t communicate with each other. Below are their numbers:
Equifax: 800-685-1111
Experian: 888-397-3742
Transunion: 888-909-8872
If you have accounts in collections, give the creditors a call directly. If you have experienced a legitimate financial hardship, you can negotiate a settlement for a lower amount. Once you start paying these off, the negative impact will end, and your score should start to improve.

Things to stay away from:

Be careful when considering advice from friends and family. Even though they may mean well, those who haven’t worked in the credit industry often provide misinformation which can hurt your score more.
Stay away from consolidation loans. The majority of these are offered by predatory loan agencies that charge unreasonably high-interest rates! These loans often cost you more money in the long run, can lower your scores, and may serve only to perpetuate the debt cycle.
Stay away from credit counseling and credit repair services. These companies often charge hundreds, if not thousands of dollars in up-front fees for things you can do yourself. They typically dispute any accounts you have in collections by calling credit companies and credit agencies.
Use Debt Settlement companies as a last resort. Many of these companies promise to eliminate your debts for a fraction of the cost and in less time. These companies may save you some money and sometimes time, however, these companies ask you to voluntarily withhold payments to your creditors while they attempt to reach these settlements. This can take months, or years. While they’re attempting to reach settlements, you are instructed to stop making payments directly to your creditors, which often results in accounts going into collections. This usually has a large, negative impact on your score. I would only recommend going this route if you’re struggling to make your payments and want a clean slate.
- If you’re thinking of using a debt settlement company, make sure they’re Accredited with the American Fair Credit Council (https://americanfaircreditcouncil.org/). They’re a consumer protection organization that fights for consumer rights within the debt settlement industry. Accredited members of the AFCC must comply with the following: all fees for services must be disclosed up-front; fees cannot be collected until a settlement has been reached with your creditors and payments have begun; contracts must be provided to the customer and the representative is required to review all disclosures with the customer. If the company is not Accredited with the AFCC, don’t waste your time!
- Read customer reviews before enrolling. The AFCC provides a blanket of security, but like all organizations, they’re not perfect. They must investigate before certification is taken away. Some companies are currently facing lawsuits for charging up-front fees for services and for misleading customers but have managed to hold on to their AFCC certifications during the investigations.
- Always read the contract twice and ask questions before signing up! These contracts can be confusing and full of legal jargon. The rep should go through all this information with you and make sure you feel comfortable with the program.

Credit Help