Improve your Credit

Improving your credit score seems daunting, however it doesn’t have to be.  Armed with the following information you will be able to improve your score.

1:  Check Your FICO Score with a Tri-Merge Credit Report

First you need to see exactly what your credit score is.  If you don’t know where you are, you can’t get to where you want to be with improving your credit rating.  Once you know your FICO score, you can create a plan to improve your credit score more easily.  Once a year, request a score from the top three bureaus – Experian®, Equifax®, and TransUnion®.

 

FICO Credit Score ranges (estimated):

300-550 Poor May be rejected, or only accepted for very high interest rates
551-650 Average Qualify for high interest rates
651-710 Good Qualify for moderate rates
711-750 Very Good Qualify for very competitive rates
751 and up Excellent Lowest interest rates

2:  Pay Your Bills on Time Every Time

This is probably the most important thing you can do to improve a credit score.  Not doing this severely impacts your credit score.  If you haven’t been keeping up with your payments, it’s likely that your credit score has dropped substantially.

3:  Actively Use One or Two of Your Best Cards, Forget the Rest (but don’t close them out)

If you are have a low credit score and are having debt problems, this will require a great deal of willpower to change your habits.  Don’t spend anymore on those additional cards.  And if the cards that you are actively using are reaching their limits, that means one thing – you need to spend less and budget your money better – and starting paying in cash.  This will be temporary until you can get out your bad spending habits.

4: Don’t Push Your Cards to Their Credit Limits

If you are having an issue maxing out a particular card with a lower limit, try to spread your spending out across another card.  It’s better to keep the utilization down on each card to help improve your credit rating.  Shoot for 25%-30% or lower with your utilization rate, even if you are consistently paying them off in full every month.

5:  Reduce Your Credit Card Balances All You Can

A recap of a detail in Point #1 but important to mention again.  The more you can pay down those balances, the less interest will accrue for your debt management issues and the lower your credit utilization will be.  As stated above, lower utilization should help increase your credit score quickly.  And that’s less debt to worry about, and more money in your pocket and not in the pocket of the credit card companies or lenders.



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6:  Don’t Apply for Too Many Credits Cards or Loans

Each time your credit score is checked by a credit or loan company, you could potentially lose points from your FICO score.  If you need to do it, it’s better to apply over a short period of time, say a 2-3 week period.  Clusters of credit inquiries aren’t so detrimental; it is when queries occur over a longer period of time.  If you’re already having debt problems, then you don’t need to be looking into more cards or loans – you should be focusing on settling credit card debts and loan debt already.  Part of how you got here is by overextending yourself with debt.

7:  Get a Secured Credit Card

A company offering a secured credit card will require you to place a deposit of several hundred dollars down or whatever the company requires.  This secures the card in case you have trouble with payments.

8:  Dispute Any Possible Errors or Mistakes

Occasionally, mistakes will appear on your credit report.  If you didn’t do anything to open a new account or have any new inquires made, you can certainly ask to have them removed.  Also if you happened to miss some payments because you simply forgot to pay on time, most companies are quite forgiving when it comes to removing them.  Go to your credit card company or lender directly and ask that it be forgiven.  Of course you must pay on time the next time, but generally this is easy to do.

 

Here are a few sites that will help you improve your credit score:

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August 2018
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