How To Improve Your Credit Score

How To Improve Your Credit Score?

It isn’t always easy getting those bills paid and now you know there is damage but wonder what steps you can take to improve your credit score. Even if your credit score is ok, you can only benefit from taking a few steps to raise your credit score. The higher your score, the lower interest you will pay on your loans. If buying a home is in your horizon, you especially want a score as high as you can get it. The very first thing you need to realize is you can improve credit. You should understand you are not alone. In the US, there are over 30 million people with credit problems severe enough that obtaining a loan or a credit card would be very difficult, if not, impossible. You can, however, take some steps to change your score.

What Is Your Credit Score?

The first step you need to take in fixing your credit score is to know what your scores are today. See pull credit report for details on how to pull your credit report and where to pull your credit report from. Now, your score will range from 350-850.  Remember that with some simple steps, you will start to see your credit score rise.

1) Pay down your credit card balances. Your goal here is to reduce your credit card balances so you have are using less than 30% of your available credit.

2) Lightly use your credit cards. It is important to use your cards but use them lightly. Also remember that credit card companies report balances are different times each month and it is rarely right at the due date. So if you rack up a big balance and plan on paying it off, you need to realize that the account may be reported while the balance is high, therefore reducing your credit score.

3) Verify your credit card limits. If your credit card lender is a limit that is lower than you actually have, this may have a negative effect on your score.  If it is incorrect, make a quick call to your lender and they should be able to update your credit limit with their next update to the CRA’s.

4) Get out that old card. The older your credit history is, the better it is for your credit score. So it is very important to not stop using your oldest cards. If you stop using the cards, the card issuer may stop reporting updated information to the credit bureaus. So use the card every few months and then pay it off when the statement arrives.

5) Get some goodwill love. Some people believe this is easily achieved and others have had no success but it is still worth a try. If it works for you-great. If not, you have only wasted a short amount of time. If you have a  good history with the lender, they might agree to delete a late payment from your credit report.  Your goodwill request should be made in writing.  Another solution for accounts that have a serious history of late payments etc is to ask that they be “re-aged.”  If you have an account that is open, your lender may agree to delete any prior delinquencies as long as you make several payments on time.  Be sure to get any agreements in writing.

6) Credit Disputes. When you get your credit report, you should go through it carefully and dispute items that you don’t agree with. I always suggest you mail your dispute certified return receipt. ALWAYS. You can simply dispute using the reason ‘Not Mine’. The older the negative item, the easier it is to get removed. Also a small amount is one that some lenders do not bother taking the time to investigate, therefore they do not respond to the credit bureau within the 30 day time limit and the item must then be removed from your credit report.  If you have credit with a lender that has joined another company, you may have more success as oftentimes the merge creates a mess of their records and they can’t verify the loan.  Credit Disputes can rapidly improve credit.

7) Blast significant errors. Credit scores are calculated off of the information from your credit report so it is important to really check carefully. You should realize that there are many items in your credit history that do not impact your credit score.

Things that do improve your credit score and are worth disputing or correcting:

• Charge-offs,  late payments, collections or items you find on your credit report that are not yours.
• A lower credit limit than you actually have.
• Accounts that show “paid charge off”, “settled,” “paid derogatory,”  or other labels other than “paid as agreed” or “current” if they were paid in full and on time.
• Accounts you listed in a  previous bankruptcy but are still showing as unpaid.
• Items older than 7 years and are showing negative status.

Things you really don’t need to worry about includes:

• Your name is not spelled right. (unless there is a concern for identity theft)
• An old address or an incorrect address.
• Incorrect employer information.
• Account that is closed but is listed as open. (don’t fix this, leave it showing as open as this is better for your score.)

Other actions to beware when you’re trying to improve credit scores:

• Don’t ask a lender to reduce your credit limit.  Lowering your credit limit,  will reduce the available credit that is so important. Remember you need to keep your balances under 30% of your total available credit. This value is worth 30% of your score so it is important to follow this.
• Don’t make a late payment. If you have a bad credit history with a lot of late payments, adding another one isn’t going to hurt your score much but since the goal here is to improve your credit score, you need to avoid any late payments at all. When your score gets in the 700 range, one late payment can lower your score by 100 points!
• Consolidating your accounts. You need to be careful when doing this. Remember you need to keep your total utilization of credit down under 30% so whether you have one card maxed out but all others are open or small balances on several cards, keep that number under 30%.
• Don’t apply for new credit, if you have plenty.  If you do not, you should get an installment loan if you do not have any. Remember to have a variety of loan types.

Improving your credit is easier the lower your score and the older your negative items. Once your score reaches the 700 range, you are in a good zone and probably won’t benefit much but you should always pull your credit reports at least once a year and review it for any errors. Paying attention to the above items can help you Improve Credit right away.