Improve Credit Score Quickly
August 12th, 2008 Subscribe To Our Feed
If you have ever had trouble getting a loan or a credit card from a financial institution or bank then it could be that you have a low credit score. Most people are aware that the credit score that you have can make a huge difference to the type of credit you can get and how you are treated by people that may lend you money. This article will look at how to improve your credit score in an fast and effective manner.
So what exactly does a poor credit score mean ? Well, in the eyes of the banks, it means you are a credit risk. You can’t be trusted to pay back any credit that you may borrow from a bank or other money lending institution. Consequently they are hesitant to give you credit. If they do give you credit, they try to balance what they perceive as a risk by increasing the interest rate on the credit or limiting the amount of money you can borrow. Whatever they do, it generally means you are out of pocket.
Credit scores are recorded by credit agencies. There are three main agencies that perform this function. They arrive at this score by recording all the past transactions of an individual. This includes credit card transactions, mortgage repayments and various loans and bills.
If you haven’t been able to pay your bills on time, defaulted on loans, had a repossession or failed to pay credit card debt then you will have a bad credit score or a low credit score
Many people may not be aware that creditors have access to this information. However, you have to realize that this information will act as a security whether you are a person who is credit worthy or not.
You need to look financially responsible in the eyes of the credit reporting agencies. So, here are some simple tips to raise your credit score quickly.
The first step is to find out what your credit score is. You can ask for a free report from each agency once a year. Apart from finding out whether you have a low or poor credit score, you can also look at all the transactions that have been used to give you this score.
Although it is unlikely, your poor credit score could be the result of credit card fraud or identity theft. Someone may have used your identity or credit card to buy items and put you in debt. A far as crime goes, identity theft is a growth industry so it pays to check this out. Indeed, even if you have a good credit score, you should check your free credit reports for potential identity fraud from time to time.
Another factor about checking the credit score is that an error may have been made that is contributing to your poor score. By looking through the transaction details you can clear any errors up.
With your history sorted out, you want to start focusing on the present and the future.
If you have any debts, be they credit card or loan debts, make some firm plans to eat into this debt. Work out a budget so that you can divert some of your monthly income towards the debt. You don’t have to pay it all off at once. Just make it obvious that you are addressing the debt and this will translate through to your credit score.
For example, if you have a credit card debt, you don’t have to pay all of it at once. The point to all this is to pay down your credit card debt up to the point that it will not have a balance that exceeds 50% of your credit limit.
And possibly the most important thing to raise your credit score is to pay all bills on time. Credit agencies will not have anything negative to report if you do this and this will raise your credit score rapidly. Paying bills on time involves being organized on two fronts. The first is to not extend yourself – live within your means. Develop that budget that was mentioned above so that you stay in the black each month.
The second organizational skill is to know what needs to be paid and when. Some people consolidate debts into one lump sum to make this easier to do. This may be an option for you, but the first task is to record all the payment dues dates on any debts and put money aside for this payment. Missed payments increase your debts and lower your credit score.
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How To Raise Your Credit Score
May 7th, 2008 Subscribe To Our Feed
If you are recovering from bankruptcy or have had serious debt problems in the past, you will probably have a low credit score. As most people know, this score is often used as an indication of your financial management skills. To this extent, financial institutions base many of their decisions on this score. So if you apply for a loan or a credit card, your score will influence the decision. If your score is particularly low, the institution may decline your application for credit. If it is in the middle then the interest rate you may get will be higher than someone with a higher score. The credit score may also be used by landlords to determine if you are a suitable tenant or potential employers, especially in finance related jobs, to determine if you are a suitable candidate. Thus, it is important to raise your credit score. This article will cover how to raise your credit score.
The first piece of advice is to check your credit history. Your credit score is derived from the information that is contained on your credit history. In some cases this history may be wrong, out of date or may indicate that you are a victim of some kind of identity theft. Your first job is to check that all the information contained on the report is legitimate and correct.
You can receive a free credit report from each of the three credit agencies (Experian, Equifax and TransUnion). Typically, you want to look for obvious errors, like a false account or an account that you have no knowledge of. This could be opened by an identity thief. Then look for more subtle mistakes, like accounting errors. Things like incorrect personal details and charges that are not yours. You also want to check that certain negative information in your past has been taken off the record. For instance, most negative information can only be retained for 7 years and 6 months. Bankruptcy settlements can only stay on the report for 10 years.
Once you have established that your credit history is correct, you have to work on improving your financial management skills. This will turn around your history and increase your credit score.
Work on building up your savings. Try to get a regular savings plan going, no matter how small the amount may be. The fact that you can stick to the plan is a good habit to get into and will build long term wealth.
Minimize your use of credit cards. Whilst it is advisable to have one or two credit cards rather than none at all, you should not use the cards excessively. You should try to keep well within the credit limit for each card and pay off the balance each month. You should look to pay all bills on time every month.
The main idea is to show financial management over a period of time. This time period could be as short as six months, depending on how you go and the types of bills and credit you are dealing with. It may take longer however, but the important thing is to create a set of habits that will hold you in good stead for the long term future. Indeed there is no instant fix on how to raise your credit score, simply good financial management over an extended period of time.
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