4 Steps to Improving your Credit Score
We live in a credit nation. The mistakes in handling credit are well documented but even so no one would dispute the importance of having good credit. Your credit score, when handled properly, can give you many advantages to creating wealth through leverage. Here are some credit basics to improving your scores.
Step 1: Determine what needs Improvement? Your first order of duty is to determine exactly what derogatory and incorrect items show on your credit report. There are several ways to accomplish this but the easiest is simply going directly to the source. There are 3 credit bureaus that creditors use. They are as follows; www.equifax.com, www.transunion.com, and www.experian.com.
Order your reports AND scores directly from the bureaus. Don?t waste your time dealing with one of those companies offering you a free report. What you will find is that the reports are NOT free and what they are after is setting you up on a monthly pay plan to monitor your credit.
When you receive your three reports take the time to review each one individually. Each credit repository reports your score based on a different matrix and some creditors do not report to all three bureas. Make note of any item that is reflecting as late or is listed as a public record.
Step2: Go after it. Begin the dispute process and always dispute items in hand written letters. Though it is easier, do not use the forms provided by the bureaus. Employees at the credit repositories are trained to notice if the disputes are false or made by a credit repair company. These employees are real people handling your dispute so you are better off handling it in a personal way.
Challenge all the inaccurate information on your report. It can make a huge difference in credit score very quickly. If there are derogatories on you report that are in fact yours then it is best to begin by contacting the creditor directly. Creditors will often remove derogatory information at the request of a current client. Sometimes putting pressure on them to act in your behalf by threatening to close the account if you are not satisfied will produce quick results.
Step 3: Sit it out or Pay. Eventually almost all derogatory credit will come off your credit report after 7 years. In some cases you are better waiting it out then investigating. If you are close to the 7 year period then investigating the account could reactivate the derogatory and you will see an immediate drop in credit score. So take care in disputing an item that is old and that you cannot prove to be incorrect.
Another thing you can do to improve your scores immediately is to pay down current credit items such as credit cards with higher balances. A good rule of thumb is that your balances should be no more than 50% of your available credit and preferable as low as 30%. If you have one card with a zero balance and another with a higher balance then you are better off transferring a part of that balance to the free and clear card.
Step 4: Be careful establishing new credit or closing old accounts. Most people don’t realize that a simple act like closing out an old account that you have not used for a while can lower your score. One of the contributing factors to your score is the length of time your credit has been established. That means that older accounts, even those no longer used, will have a favorable effect on your credit score. Never close out old especially if you are in the process of applying for a mortgage or loan.
By applying these basic steps you can fix or maintain your credit. Though it is not an easy task it is worth the effort. There are some cases where using a reputable credit repair agency is helpful but first apply these simple steps that I’ve outlined here and you’ll be on your way to great credit and financial security.
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