4 Easy Ways to Raise Your Credit Score

November 22nd, 2008 — Debt, Money, Personal Finance, bad debt, credit cards, credit score, good debt 

butterflyFor many Americans, dealing with a low credit score can be incredibly frustrating. It’s tough to get any loans and in some cases, it may even affect your prospects for employment. If you’re sick of dealing with a low score, it’s time to starting putting into motion some techniques that will help your score go up. Some people have reported a bounce of more than 120 points after using these tips, but everyone’s credit is different. However, any jump up is a jump in the right direction.

1. Request a copy of your credit report and thoroughly examine it.

Errors are incredibly common on credit reports but the good news is that you can fix these. Go through each item on your report and make sure that they are accounts that belong to you. If not, start disputing them. The big three credit reporting agencies all offer online dispute services, so you can easily get these errors off of your report. It may take up to three months for the whole process, but this is the best way to quickly get your score back up.

2. Don’t close off your old credit cards.

Most of us have been trained that all debt is bad and we immediately close off our cards when we’re trying to get back on track. While it’s perfectly fine to pay off your cards, closing the account will definitely hurt your credit. It’s actually smarter to keep a small amount on those cards and make monthly payments. You’ll get the benefit of good reporting and the accounts won’t be marked as closed.

3. Get a small personal loan.

If you have the money to pay back a personal loan, go to your bank and request a very small loan. It’s the principle of the thing that matters here, not the actual loan. You’re going to use this to rebuild your credit. It’s best if you use this loan wisely and make an investment that will create another stream of income. That way, while you’re repairing your credit, you’ll be making money.

4. Open a secured credit card.

If your credit is so bad that most credit card companies won’t even charge you, open up a secured credit card. Use it sparingly and pay it off every month. You’ll get the benefits of glowing monthly reports and you really won’t be out much.

When it comes to fixing your credit score, it won’t happen overnight, but you can make a great deal of progress by following the above tips. You should see a change in your score in as little as three months, and it will just keep getting better as you keep making those payments. Creditors will see that although you may have made some past mistakes, you’re back on track and a much less risky prospect.

Remember, not all debt is bad. When you leverage your debt with your future in mind, this is the easiest way to make money and improve your credit.

Photo Credits: 1

Related Articles Related Stores

1 Comment

Restore Your FICO Score – Part Three

September 30th, 2008 — Debt, Goal, Money, Personal Finance, credit score 

In the previous parts of this article we discussed how FICO score can impact your financial status as well as the initial steps that you can take to begin restoring your FICO score. We covered handling collections first since they do have a big impact on your overall score, but there are a few other ways that you can quickly see a big jump in your score.

After you have the collections on your account either settled or verified, double check to make sure that they were removed from your credit report. If a collections agency agreed in writing to remove the entry upon payment and did not, you can send copies of the letters and your cancelled check to the credit bureaus to have it removed by them.

Now that collections are out of the way, let’s move on to more ways to restore your FICO score. If you have abused your credit in the past, opening a new card can be difficult. Establishing a good payment history is one way to get a bounce of 30 or more points on your FICO score, but that can be tough if you can’t get any new credit.

Open up a secured credit card and use it once a month for a small purchase. (Here are some bad credit credit card recommendations.) Pay that off completely before the due date. After six months, you should start to see a change in your FICO score. Keep the balance on that card as low as possible to show that you are utilizing your available credit wisely. The lower your debt to limit ratio is, the better your FICO score will be.

Continuing on that theme and assuming that you still have accounts that are open, start paying those balances down each month and stop using the cards. You do not want to close the credit card accounts, since a closed account may actually reflect poorly on your rating. But, that doesn’t mean that you have to use them either. Keep paying on them each month, and try to shoot for paying more than the minimum balance requirement. This will help you chip away at a high balance and lower your debt to limit ratio nicely.

It can typically take anywhere from six months to two years to completely restore a FICO score, depending on your personal situation and just how badly in debt you are. However, with diligence and time, that score will change for the better. The key is making your payments on time, freeing up your balances and keeping an eye on any collection efforts.

It is also a good idea to read through the Fair Debt Collections Practice Act, especially if you are dealing with creditors. They do have rules that they have to follow, but it’s up to you to know your rights. This act will protect you from harassment, but only if you take action. Take the time to read through it, and don’t be afraid to tell a creditor that you will report them if they overstep their bounds.

Photo Credits: 1

Related Articles Related Stores

No Comments