Here are 5 tips to help improve your credit score.
1. Get copies of your credit report then make sure the information is correct.
Go to the Annual Credit Report web site. This is the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every 12 months.
You can also call 877-322-8228 or complete the Annual Credit Report Request Form at the Federal Trade Commission (FTC) web site and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
2. Pay your bills on time.
One of the most important things you can do to improve your credit score is pay your bills by the due date. You can set up automatic payments from your bank account to help you pay on time, but be sure you have enough money in your account to avoid overdraft fees.
3. Understand how your credit score is determined.
Your credit score is usually based on the answers to these questions:
Do you pay your bills on time? The answer to this question is very important. If you have paid bills late, have had an account referred to a collection agency, or have ever declared bankruptcy, this history will show up in your credit report.
What is your outstanding debt? Many scoring models compare the amount of debt you have and your credit limits. If the amount you owe is close to your credit limit, it is likely to have a negative effect on your score.
How long is your credit history? A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.
Have you applied for new credit recently? If you have applied for too many new accounts recently that may negatively affect your score. However, if you request a copy of your own credit report, or creditors are monitoring your account or looking at credit reports to make prescreened credit offers, these inquiries about your credit history are not counted as applications for credit.
How many and what types of credit accounts do you have? Many credit-scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score.
To learn more, see the Federal Trade Commission’s publication on credit scoring at their web site.
4. Learn the legal steps you must take to improve your credit report.
The Federal Trade Commission’s “Building a Better Credit Report” has information on correcting errors in your report, tips on dealing with debt and avoiding scamsóand more.
5. Beware of credit-repair scams.
Sometimes doing it yourself is the best way to repair your credit. The Federal Trade Commission’s “Credit Repair: Self-Help May Be Best” explains how you can improve your creditworthiness and lists legitimate resources for low-cost or no-cost help.
First and foremost myth related to credit score improvement is ‘If I have a credit card I no longer use, I should close it.’
Reason why I call it a wrong notion is since you already have a credit card open for some time now; it would have been taken into consideration by the credit score FICO algorithm. Since Length of credit history is one important component of your credit score rating , it would have given you an overall higher rating as you have a very high utilisation for some time now nor are you maxing out the credit limit.
Second credit score myth is ‘I have a negative of 500 $ on a credit card, and it is been there for almost 5 years, should I pay and close it’
Since you are thinking of paying for deletion you should have the negative deleted from your credit score report. But DO NOT CLOSE YOUR ACCOUNT. Reason is once you close your account after paying; the history would no longer be that beneficial to you for a higher credit score as much as if it were open.
Third credit score myth is if you want to increase your credit score, you should open a new account. This is the worst affecting myth. Your current credit behaviour is most observed in your credit score. Your current enquiries for new credit card will be prominent in all these credit reports. So if your strategy was to open a new credit line thereby increasing the credit limit and improving your credit score, the harm caused by recent enquiry would be much more than any nominal benefit you could have got by this activity.
Fourth myth of credit score improvement is you can put your name on the credit card of an unrelated person as Authorised user, whereby you don’t access his card but since you are mentioned as an authorised user you will benefit from any positives accrued on the credit card over last two years. Reason why I call it a myth is because you are no longer going to get benefit. This is considered as a malpractice as a lot of credit repair companies have unduly exploited it and from 2009 onwards, the FICO scores have devised ways to identify such activity. So no use having your name as authorised user on someone else’s card.
Fifth myth is that credit score is all that you need to get good credit. No, this is not the case. You need to have the paying capacity for the amount of loan you apply for. Credit score determines that you have a good credit record but your loan capacity would be determined by your sources of income, your employment history and your declared taxable income. There have been cases when people have been rejected a loan based on the criteria that their taxable income was not up to the mark to get that huge loan.
One thing you should avoid is using short cuts to increasing credit score. In the short run you might get some leverage but in the long run it would only affect your credit score adversely. Nothing can be more devastating than finding your used strategy and extra hours of work put to improve the credit score has been wasted.
One advise would be to talk to similar people with similar issues and a unique place would be the forums or boards where people help each other and share their success stories and ideas. Here you would also find that the common myths of negatives on your credit score and the ongoing controversies are addressed by some key experts.
Myths related to credit score are immense. Some feel that people who are not having a credit score are the ones without any bank ready to pay them. That is not the case. Some people who do not prefer to take loans and buy on their own accounts, especially the Business community are the ones who are having no credit files.
Some feel that if there are some negatives on your credit score, the existing employer might ask you to leave. This is not the case, there haven’t be any such cases till date.
Please do not fall prey to identity theft because of some myths that you have to reveal your personal details for a particular transaction. Only banks tend to ask for certain particulars from you. Please do not reveal your passwords or credit card details to anyone else who might misues it.
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase.
Credit Score is like the exam score with minimum cut off to get admission into a prestigious college. Brings back the memory of olden days when students ply around colleges for good education for better jobs. Securing higher marks is similar to gaining credit score increase.
I would not be talking about how to increase or enhance your Credit Score since I believe, no matter what your score is it’s never enough. We feel that we could have got a better bargained APR for the new car we have purchased.
So let’s talk about how to get rid of your lower credit score. Some prefer calling it as the FICO score. This reminds me Transunion uses Emperica Score FICO. Equifax uses Beacon score FICO and Experian used Fair Issac FICO. The algorithms used by each are different but they have similar weightage for factors. This is precisely the reason why all the three Credit Rating agencies have different scores. They might not vary much.
One advice for increasing your credit score which many experts give is to increase credit limit on your credit cards. This is a time tested solution for a ‘credit score improve’ key.
What is the acceptable ratio of credit limit and utilisation? It is considered to be safe to utilise 30 % of your existing credit limit. Above 50 % is still OK but if you are over drafting on your credit card, then your credit score will fall drastically, even before you knew it.
What should one do when credit card companies are reducing credit limits and unused credit lines?
There are companies where you can formally make request for credit limit increase. Wells Fargo and American Express are two such Credit Companies which do have the credit limit increase option. There are policies attached to each of them but they are by far the best ones to try for credit limit increase, thereby leading to credit score increase.
Another advice which I use to increase my credit score is balance transfer.
I try to reduce the overall limit on my credit cards by consolidating them and transferring balance from a higher utilised card to a lower utilised card thereby also benefitting on the interest rate that is applicable.
Credit card is a revolving debt and is looked with more suspicion than any other loan like a mortgage or a car loan instalment.
The balance transfer is bit tricky; you need to check the benefit you get moving from one company to another. What are the applicable rates? And are there any hidden charges?
One thing I use is I call up my credit company and inform them about my intention to transfer my balance since I am looking for a consolidation. The original credit card company then tries to retain a customer and negotiates a better rate. Either ways you win. Overall less credit utilisation reflects well on your credit score report
There is another part which is very important and which can negatively affect your credit score is if you were to pay an older credit in full and expect it to do good to your credit report. The reason being if you are paying an old credit which you did not pay so long and it was approaching the Statute of limitation, then it means by paying you have made it current and you did not even ask the people to remove the negative from your credit report. This will decrease your score rather than increasing it.
Improving your credit score on your own is the best way to do it. Please do not try to go for quick fixes they can affect you badly. Especially do not try to get involved in identity theft. People try to create different credit files for the same name.
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase.
What is the importance of credit score? Frankly it is a very basic and Indeed a very good question.
Let’s try to find out the history behind credit scores and how it came into existence. What was the inherent need of having it in the first place?
Bankers and credit card agencies who give loans would like to know the risk they are taking. That in turn also affects the APR they are going to charge. Banks have to provide Non Performing assets at the end of the fiscal year and declare to its shareholders. So each bank had devised a method of trying to find the credit behaviour of its consumer. They had various parameters encompassing the history and length of credit. But it was never standardised.
Later the Fair Isaac Company came up with a scoring model which is very well known in the industry circles as the FICO Credit Score, used by EXPERIAN. This score gives weightage to various consumer behaviour parameters like 35% Payment History, 30% amounts owed, 15 % length of credit history, 10% new credit and 10 % on types of credit used.
Year 2009, the subprime crisis and aftermath have led to a tighter credit market with credit crunch and Banks adopting stricter policy norms.
So what has changed, the banking and credit card companies are getting risk averse. They prefer a much higher score in credit report. Now the logical question would be what this score is. The range varies with the type of loan you are applying and so does the cut off.
Generally, a score of 700+ is considered good for the mortgage related housing loans. A score of 670+ is decent for getting a good deal at the car dealers. The car dealers also tend to ask for a much higher down payment for people who have poor credit rating scores.
It has also been seen that credit reports offered by Credit Rating agencies have as many as 29% serious erroneous reports. 71 % reports have some other error of minor importance. So there is a high probability that your credit report may have a negative which was added by error and so it is imperative that you monitor your credit reports once at least every quarter.
Credit score has been taken as guidance by almost all the major credit card companies and lenders for giving loans and credit cards. It is a negotiating factor during business deals and hence it should be noted by one and all that YOU MUST take good care of having a credit score that is in the higher range.
Credit Score is not a percentage but a percentile and also it is a straight way comparison of apple against apple so You will be compared with a similar background person having similar credit payment history.
Importance of credit score lies in the fact that it brings the extra reliability of payback for the lenders and thereby it increases the chances of you getting a loan.
Credit score is important for securing good loan from a reliable bank which is liquid and has a good market image.
Importance of credit score also lies in the fact that once you have a good credit score, you are assured of a decent APR from a good company. It has actually standardised the process of getting debt and money flow.
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase. Check it now
Scams associated with credit repair companies or credit score scams.
Everyday there is a new credit repair company which spins off declaring it has got a quick fix to raise the score of its client and charges a hefty sum.
The promises are to clean up the credit score so that they can get a mortgage, car loan, insurance or even a job.
Fact is no one can remove a correctly mentioned negative entry on your credit report. So after you have paid a hefty amount to the credit report what you get is same credit report and a lot less money and a lot less time which you could have otherwise utilised.
The Only Legitimate repair starts with YOU and Only YOU.
There are certain laws that you should be aware of:-
1. No credit repair company can charge you all amount before they have completed their promised services.
2. The company cannot refrain you from contacting all the three credit rating agencies.
3. The company cannot ask you to try to invent a new credit identity and then a new credit report- by applying for an Employer identification Number instead of your social security number
4. To file a complaint against all such credit repair companies visit ftc.gov or call the toll free number 877 (FTC HELP) (1-877-382-4357)
Sometimes it happens that due to desperation we try to adopt some shot cuts which we feel are legitimate since everybody else is doing it. Credit repair scams are taking advantage of your desperate situation. So it is always important to take care of your finances on your own.
There are certain fantastic ONLINE Resources which are legitimate and which can be a great guide for easing your way in making a successful transition from an average credit score to a most amazing credit score.
You should look out for the credit card repair scams and take full responsibility and leadership in dealing with your own situation.
Nothing is more amazing than having a feeling that you could take care of your own situation on your own and made a positive change. This reflects on other parts of your life since once you are in control of your financial health your overall confidence increases manifold.
Beware of the credit repair scams and try to stay away from them. It is in best interest of you and your credit score. Since for present there might be no accounts held by FICO as manipulated but in future there might be a change in algorithm and you might find yourself at the wrong end of law just because your credit repair company had illegitimately tried to increase your score. Credit repair scams have grown in alarming proportions and this has to be controlled.
Do your own credit repair and even if you have a bad debt it should be a long term goal to be debt free best put as financial freedom
Gladwyn Riggs is a well known expert in the specialised field of Credit Score improvement. He has come up with an amazing Hand Holding Guide for Rapid Credit Score Increase.
