How to Improve a Bad Credit Score

There’s a lot of talk, especially with the debt free movements (which are great, btw), about credit scores. Some people will tell you that credit scores are only important if you plan on taking out debt. Other people, like me, know that they are used for so much more.

In fact, beyond getting a good interest rate on a loan your credit score is used in determining your insurance premiums and can be a factor on rental and job applications.

Having a good credit score can save you a TON of money. And luckily, credit scores aren’t permanent. It will take some time to raise a low one, but it can be done.

Here’s how to improve a bad credit score.

First, Know Where You Stand

Let’s treat this like a game. It makes the process more fun. Before you begin to work on improving your credit score let’s see where you stand.

You can get a completely free credit score from Credit Karma here. There are no gimmicks. It’s one hundred percent free. This is a great service you should be taking advantage of so go ahead and do so.

You can use Credit Karma to check your credit score on a monthly basis.

Get a Copy of Your Credit Report

Next you need to request a copy of your credit report. You can get one copy per year from each of the major credit bureaus at annualcreditreport.com

Look through your credit report for any discrepancies. If something is inaccurate dispute it with the reporting credit bureau.

If you have collection accounts on your credit report it’s important to note that paying those balances off early will NOT remove them from your credit report. They will stay on your report for seven years.

Lower Your Credit to Debt Ratio

One factor that plays a large part in your credit score is your credit to debt ratio. This is calculated by how much debt you owe compared to how much credit is available to you. The lower the debt to credit ratio, the better.

There are two ways you can lower this:

• Pay down your debt.
• Have your credit limits increased.

If you have a problem with debt and credit card usage then paying down your debt will be a better option than calling your credit card companies to see if you can have your limits increased.

Pay Your Bills on Time

If you’re behind on your bills then you need to work on getting caught up. Paying your bills on time is a huge factor in your credit score. This proves your responsibility.

Make every effort to pay your bills on time each month. Even if this means you can only make minimum payments.

It’ll Take a While

You’re not going to see immediate improvements in your credit score, no matter what you do. However, if you can work on paying down your debt and make your payments on time each and every month then you should see an improvement in six months to a year.

source: everybodylovesyourmoney.com

Quick Fixes for People with Bad Credit

Do you have bad credit?  If you do, then you’re not alone.  Indeed, having bad credit is not a good thing and no doubt, you want to get yourself out of it as soon as possible.  The good news is, there are positive steps that you can do to improve your credit. Consider these quick fixes:

Know where you stand.  Have you checked your personal credit report? If you have not yet requested your free credit report for this year, you can go to www.annualcreditreport.com to order.  You can order all your three reports from the three major credit bureaus at once so you can be sure that all versions of your report contain accurate information.

Checking your report will
to achieve a high score.

What’s most important is how you pay off your credit card balance.  It’s best to pay off your full balance each month so you don’t incur interest rate fees.  Use your credit card for a small purchase so that repayment need not be a burden.

Avoid hard inquiries.  If you need to acquire a new credit card or a loan, do not submit multiple applications to different lenders at once.  Doing so will only damage your credit score even more.  What you want to do is spend time comparing your options and once you have the right lender, that’s the time you can submit an application.  Don’t forget to check the lender’s credit requirement to avoid unnecessary rejections as this will also pull down your score.

Keep credit usage minimal.  You want to use your credit regularly but you should keep it as minimal as possible.  In fact, you should not use more than 30% of your available credit if you want to see an improvement in your rating.

Apply for a small loan.  Aside from revolving credit, adding other types of debt to your name is a great way to improve your credit score.  An installment loan whether a personal loan, student loan or a car loan gives you the chance to prove your creditworthiness through timely submission of your monthly payments.

Acquire a small loan with just the right period of repayment.  Choose a lender that offers a reasonable deal.  Furthermore, make sure that the loan provider reports to the three major credit bureaus.  As you submit your monthly loan payments, you will strengthen your credit history and add points to your score.

source: creditcreators.com