Action Plan for fixing your Credit Score

26
July

A poor credit score can be a real problem. It can prevent you from being able to borrow money so you may miss out on important financial arrangements like a car loan or a mortgage. At the very least, if your credit score is poor, you will find it more expensive to borrow mney, with credit companies deciding that you a poor risk and so charging you a higher interest rate. This is because they want to recoup the money from you as fast as possible before you default like you did in the past in order to ‘earn’ your current credit score.

However, all is not lost. You can repair your credit score and here is how to do it:

1. Correct any errors on your credit report

You probably never expected to have to dispute your credit score, but mistakes can and do occur. Sometimes it is simply a matter of information not having been updated. So if you have recently paid off a credit bill and that is not reflected in your credit report, then that may be worth correcting with the credit reporting agencies so your credit score gets readjusted.

You need to be explicit when making an application to have something on your credit report changed. State exactly what the mistake is e.g. when you paid a certain credit bill off. Also state exactly what the credit report should now say. The easier you make it for the credit bureau to change your credit report, the quicker they are likely to change it. Of course, they won’t just make changes to your credit report based solely on your word. You will need to send in documentary evidence at the time you apply to have your credit report changed. However, photocopies are fine. Hang on to the original of your proof!

Your application to have your credit report changed should be sent by certified mail. The credit bureau is obliged to investigate any claims for changes in credit rating. They must also let you know the results of their investigation, regardless of whether or not they agree to change your credit report. There must be no cost to you when they do this.

2. Ensure that your proper lines of credit are reported

Sometimes, creditors will not post your proper line of credit because they want to make you look less desirable to other credit companies, with whom they are in competition. You should get this changed in order to improve your credit score. You should be particularly careful to have any bankruptcies that are out of date taken off your credit report. You can have bankruptcies taken off your credit report after ten years and other negative items can be removed after seven years. However, they may not be taken off your credit report unless you specifically request for this to happen.

3. Make sure that you pay off all credit cards and other lines of credit off down to an optimum level of thirty per cent of your credit limit.

This works most effectively because the people offering you credit and with whom you take up accounts want you to use it. However, it is ideal for your credit score if you don’t over-stretch yourself.

4. Keep control of your credit cards

Pay off your smallest bills first and next the ones that are closest to being maxed out. Do not borrow to your maximum limit.

5. Use your old credit cards

You can increase your credit score by using older lines of credit. Keep using the cards regularly and sensibly and you will keep your credit score updated.

6. Limit your credit cards to the ones you can repay promptly

If you have too many store cards and credit cards, it is too easy to get in financial trouble and get behind on your payments so you soon wreck your credit score.

7. Make a budget

Be honest with yourself what your debts are and what it is that is spoiling your credit score. Once you have made a realistic assessment of your credit report, you can start to deal with the problems on it.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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