The value of diligently tracking your credit score
is often underestimated. Failure to know what
is on your credit rating can keep you from qualifying
for loans and in far too many cases will cause
you to pay higher interest rates.
The
trick to raising your credit score is no secret,
but it does take diligence and hard work.
First,
check to see what is on your credit report.
You can usually obtain a copy of your credit
report for free on a trial basis from a number
of agencies. Take caution, however, not to overuse
these offers. Requesting too many credit reports
can actually have the opposite effect on your
credit score. When lenders see a large number
of credit report inquiries they assume it is
due to applying for loans and credit cards.
This translates to money problems and lowers
your credit score. At the most, you should only
request your credit report one to two times
per year. That should be sufficient for you
to stay on top of your credit score.
Make
sure you obtain a three-in-one report. There
are several credit reporting bureaus and each
one calculates your credit score in a slightly
different manner. It is in your best interest
to find out what is being reported by each agency.
If
you do have a bad credit score, some of the
items that contributed to your rating will take
time to clean up, but the good news is that
some can be cleaned up in just a matter of days.
Save
yourself some money and time and steer away
from offers from companies who claim they can
fix your credit score for you. In most cases,
these companies charge a small fortune and do
very little. There is really no secret to fixing
your credit. You can do it yourself and save
yourself their expensive fees.
When
you receive your credit report, be sure to review
it carefully. While most of the information
your report will probably be accurate, there
may be some information that is completely in
error. For example, you may notice that while
you distinctly remember paying off a bill in
the past, it is now showing up as delinquent
on your credit report. In worst case scenarios,
you may realize you have been the victim of
identity theft and someone else is having a
good time at the expense of your credit rating.
If
you do see something on your credit report that
looks suspicious or that you know is completely
in error, write a letter. Keep it brief, but
state in clear terms what the situation actually
is. If you paid off that bill, include copies
of backup documentation; such as cancelled checks
or receipts. Mail the letter certified with
a return receipt requested.
Be
aware of what factors contribute to your credit
score. Payment history, account balances, age
of established credit, recent inquiries and
opened accounts, credit mix are the five major
factors that makeup your credit score.
Don’t
succumb to offers for a certain percentage off
a purchase if you open a charge account. That
10 or 15% you might save on your purchase isn’t
worth the negative impact on your credit score.
If
you have a lot of credit cards, don’t feel
you need to get the scissors and start cutting.
Credit cards can work to your advantage if used
properly and responsibly. For the most part,
credit score formulas look at the balances on
your credit cards; if you’ve maxed them
out, etc. Closing out accounts won’t necessarily
improve your credit score. If you know you have
a problem with charging everything simply because
it’s convenient, lock away all your credit
cards except for an emergency card. Then begin
a diligent effort to begin paying down the balances
on your credit cards. Experts recommend that
at any given time you should always have at
least 25% of your remaining credit limit available
and unused.
Additionally,
don’t think that consolidating your credit
card balances on one card will help your credit
score. Extensive moving around of money is a
red flag to lenders and will usually hurt you
more than help you.
If
you do have an account that has a zero balance,
don’t think it will raise your credit score
to close out the account. That zero balance
account is actually helping your credit score.
Make
sure you pay your bills on time, every time.
Set up some kind of reminder system if it helps
or even set up your bills to be deducted straight
from your account.
It
may take awhile to raise a low credit score,
but the effort is well worth the reward.
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Ellise
Walsh is an author for the Debt Help website
sosdebt.co.uk assisting individuals with debt
elimination and credit information.