BINGHAMTON, N.Y. -- The few months following Christmas are typically the busiest for credit counselors. But business is up this fall, thanks in part to the state of the economy.
"Very rapid increase in expenses, which is cutting into people's budgets to pay for discretionary items and variable items like groceries, sometimes gasoline," said Sean Every, a Binghamton counselor for the Consumer Credit Counseling Service of Central New York.
More Americans are dealing with the snowball effect of low credit scores. But there are ways to bring those numbers back up. As 35 percent of your score is on payment history, you must avoid late payments. Being late even once can cause problems.
"There's something called a universal default rate. So if somebody else that you have credit with pulls a credit report and sees that your late with another creditor, they too will increase your interest rates," said Valerie Sherwood, a CCCS Binghamton branch manager.
In tough economic times, the credit card can become a crutch for Americans who are struggling to get by. But too much plastic can take a toll on your credit score. Our Karen Lee tells us the best way to keep your number up, and the window of opportunity open.
It's also important to pay more than the minimum monthly amount and to pay off the card with the highest interest rate first. The bigger the gap between the amount you owe versus the amount of credit available, the higher the score.
Here's something many people didn't know. Every time you apply for credit, an inquiry goes into your credit report and drops your score three points for 90 days. Counselors say people need to keep in mind of this especially during the holidays as credit card companies try to entice you to sign up for these.
"I would really warn people not to take advantage of those apply for a credit card today and earn 10 percent discount or get a free gift because all those hats will lower the score," said Sherwood.
And if you avoid those traps and practice fiscal responsibility, there will be good news.
"Through proper credit use and the income to support the credit use, you can be back on track to have a rating eligibility for mortgage within four years," said Every.
Counselors also advise people to get their credit report from all three credit repositories and monitor them on a quarterly basis.