Millions of consumers have their credit ratings (also called credit scores) damaged during times of financial crisis. Many aren’t even aware of what behaviours can hurt their credit rating. A low credit score can make it difficult, if not impossible to secure a credit card or get a loan. But a low credit score doesn’t have to remain that way, in fact, it is quite easy to raise your credit score back up again. By making a few adjustments to your financial habits and taking a few tried and tested steps, you can have your credit score as good as new in no time. If your credit score is on the high side, you can improve it even more with these 5 sure-fire methods of raining a credit score.
First Find Out What Your Credit Score Is
To improve your credit score you need to know what it is. You can purchase your credit score from one or all of the three major credit reporting agencies – Experian, Equifax, and TransUnion. Don’t get your credit score confused with your credit history. Your credit history is a report of your financial behavior over any given seven year period. It is the events in your credit history that are used to calculate your credit score.
Before you can receive a copy of your credit score, you must first request a copy of your credit history or credit report, which you can do for free once a year from each of the three aforementioned agencies. Only after receiving your credit report can you purchase your credit score, which costs around thirty dollars.
Get a Credit Card
Once you know your credit score you will have an idea of how much work you need to do to improve it. One of the most effective ways of raising a credit rating is through a credit card. It must be handled responsibly however, maintaining a balance of at least 30% of the limit, and ideally paying it off in full every month. This can be easily accomplished if you only use it for small purchases. Try to use it regularly but only charging small amounts which you can pay off in full before the end of the grace period, normally about 25 days after the issue date of the statement.
If you don’t qualify for a credit card, apply for a secured card. With a secure card the bank will issue you a line of credit equal to the amount you deposit in the account. You can then regulate how much you deposit, making sure you only place what you can pay off in full every month. The regular activity will raise your credit score, as long as you make regular payments.
Keep Old Accounts Active
Keeping old accounts active is a little known but extremely effective method of raising a credit score. You might think the opposite is true, but it is not. The reason is because closing an account actually lowers your score as it diminishes your payment history which accounts for one third of your credit score. Keep those old cards alive, but pay off their balances in full, and use them only sparingly.
Stay Within Your Credit Limit
Even if you make regular payments, maxing out your credit cards will invariably lower your credit rating. It is better to actually have two or three cards with small balances rather than one account that is maxed out.
Pay Bills on Time
This should be pretty obvious, but many consumers don’t realize that late payments can damage your credit rating as much as missed ones. If you have overdue bills that you’re struggling to pay, it is advisable to contact your creditors and negotiate a payment plan with them. This shows that you are at least responsible enough to acknowledge your situation, and will gain you some goodwill so that you are not reported as delinquent to the credit bureaus.
Check your Credit Report for Errors
There may be mistakes on your credit report that could be inhibiting your credit rating. Sometimes creditors forget to inform credit agencies that a dispute has been settled, so it remains in your credit history and is factored into your credit score. If you notice any errors in your credit report, contact the creditor involved as soon as possible and ask them to contact the credit bureau to have it removed from your report.
If the creditor refuses to acknowledge their mistake, you must escalate the proceedings by writing a dispute letter to the credit bureau detailing the nature of your complaint. Yes, it is a bit of a hassle, but could restore as much as 100 points to your credit score, depending on the size of the debt.
About The Author
Ethel Wilson is a financial and credit specialist with 12 years experience in the banking, credit scores, and financial industry. She has advised countless clients on how to improve their credit score rating. She now shares the best of her credit score rating information as a contributor and editor of http://www.creditscoreresource.com.
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