Yes, it’s true – improving your credit score might be easier than you think. That’s not saying it will be faster than you think, just easier, based on specific actions you can take over time.
If your FICO® Score is lower than you’d like, you’re most likely aware that it took time to get it down to that number. Maybe you maxed out some credit cards… missed a few payments on a mortgage or auto loan… applied for too much credit in a very short timeframe. Whatever circumstances occurred to lower your FICO® Score happened over a period of time and the same holds true when taking steps to improve your credit score. It will take awhile to get your FICO® Score to where you want it to be, but the actions required to get it there are reasonably simple.
Where to start.
There are a couple of things that can help improve a credit score faster than most of the other methods to follow. Why not give them a try first to see how they work?
#1: Get a copy of your credit report. Once you receive your report, check for potential errors. Look for problems such as: late payments that are incorrectly listed or amounts owed that are wrong. (Payment History accounts for 35% of a credit score and Amounts Owed account for 30%.) Also, be sure to check the credit limits shown on the report for all of your accounts. If the listed limits are lower than your actual limits, it might look like you’re getting close to maxing out your credit every month, when in reality, you’re not even coming close. If you find any errors, dispute them immediately.
#2: Become the Negotiator. Many creditors are known for working with customers, so don’t be shy or embarrassed to ask them for some help. For accounts that have gone into collection, you can call or write the creditor offering to pay the balance if they are willing to report the account as “paid as agreed” or consent to removing the collection completely. Or, if you paid your bill as expected each month until hard times hit, you might ask them to review your previous history and ask for some leniency by removing the negative reporting. You’ll never know unless you ask.
Where to continue.
Below are actions one can take to improve a credit score over time. As stated above, these aren’t immediate fixes, it’s apparent that they are not very difficult things to do. However, it’s important to remember that they must be done on a consistent basis so that they will be incorporated into the credit bureau reports and the FICO® Score will reflect the effort.
- Pay bills on time. Paying bills on time is imperative to improving a credit score. If there are any missed payments, get current and stay current. The longer bills are paid on time, the higher the FICO® Score should rise. That’s because as recent “good payment” patterns appear on a credit report, the impact of past credit problems on a FICO® Score fade.
- Keep low balances. One of the most effect ways to improve a credit score is to pay down revolving credit (credit cards). Many people think that closing unused credit cards or opening new cards that aren’t needed (in order to increase available credit) will increase their scores. Many times, these actions actually lower a credit score.
- Build up credit history: Newer credit users should not open new accounts too quickly. Rapid account buildup can look risky for new credit users. In addition, the more new accounts opened, the larger the effect on a credit score if there’s not enough other credit information on which to base that score.
- Be cautious searching for loans: Keep the search for new loans within a focused period of time. FICO® Scores distinguish between a loan search for a single loan and a loan search for many loans, in part by the length of time over which inquiries occur. Remember that ordering a credit report directly from a credit bureau through an organization authorized to provide credit reports to consumers will not affect a credit score.
Two additional thoughts…
It’s always a good idea to get credit only when necessary. A large credit mix doesn’t always mean a higher credit score. And lastly, opening new accounts and paying them off responsibly can, in the long-term, raise a credit score that’s had problems in the past. It’s all about rebuilding and re-establishing good credit that the credit bureaus can pick up on and use in your favor.
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