A low credit score today can diminish or totally erase your chances of owning a house or a car in the future. Your credit rating is the single most important factor that will determine the amount of interest you have to pay on a loan.
Finding yourself at the mercy of creditors because you failed to make the cutoff score is one of the most unfortunate events that could happen to you. You can’t afford the mortgage for your dream home or your favorite car make all because you probably failed to pay on time for a previous loan several years ago.
Credit reports usually carry your negative records for seven years even if you eventually paid your loan in full.
No credit guru will dispute the usual advice that paying on time always is the most important thing you should do if you want to rebuild your credit rating or maintain your high credit score. However, one thing that most people forget to do in relation to their credit score is to see their own credit report.
A credit report is something similar to your school report card, where information about your credit behavior is recorded such as credit card accounts, your payment history and your credit balances or even inquiries from creditors or lenders.
Getting your own credit report is an essential step in your efforts to improve your credit rating in as short time as possible. Your credit report will tell you exactly how much you owe and your credit limit. You can use this information to increase your credit score.
You don’t want to have a balance of more than 30% of your limit. If you find you are very near your limit, say you have reached $925 on a $1,000 limit, you can pay off that balance in full and ask for an increase. If granted, this will result to an increase in your credit score.
Most time there are usually inaccuracies in ones credit report. These credit report errors do have an impact on ones credit rating and places a person as a poor credit applicant.
If you detect an error in your credit report, inform the issuing credit bureau that they should change the incorrect information. It is important to make the request in writing because you will have a record of your request.
Disputing an error temporarily removes the item from your credit report until it is investigated. Submit copies of your proof that the item is wrong and the credit bureau will correct your credit report.
Always Pay Promptly
First of all, if you want to improve your credit score, it is important that you always pay your bills promptly. Don’t let bills go overdue or they will make your credit score look even worse. Paying on time can help make your credit score look better over time.
Dispute Any Problems
If you find that there are any errors on your credit report, it’s important that you take the time to dispute them right away. These errors may be affecting your credit score negatively, so take care of them as soon as you can.
Avoid Too Much Debt
Having too much debt can negatively impact your credit score. If you want to improve your score, avoid going too far into debt.
When your credit score is calculated, the available credit is compared to the amount you have used, so if you avoid using too much credit, your score will look better. As you pay down your debt, your score will get better as well.
Don’t Open Too Many New Accounts
Opening new accounts is not a great thing if you want to improve your credit score. If you suddenly are opening a lot of new accounts, this can send your credit score plummeting.
Old Accounts Can Be Helpful
You may be tempted to get rid of those old accounts, but keeping them may help your score. Instead of getting rid of the account, keep it open. It can raise the amount of available credit you have, improving your credit score.
See If Credit Counseling Is Right For You
If your interest rates are so high that it looks like it will take 30 years to pay them off consider a credit counseling service. By setting up affordable payments that you make ON TIME to the credit companies you will definitely improve your credit score while eliminate that debt your drowning in.