Great Ways to Improve Credit Scores

03
January

Most consumers are well aware of the fact that their credit rating impacts many different aspects of their life, such as the ability to get a new job or the ability to borrow money when necessary. However, it also affects insurance premiums, utility deposits, and a variety of other costs that all add up. Individuals that are plagued with a less than desirable financial history often pay much more than everybody else and it is important to take whatever steps are needed to remedy the situation. Before a person gets frustrated, the good news is that there are several easy ways to improve credit scores and they can be implemented immediately.

The first and most critical step to improving a credit score is to obtain a copy of what the bureaus are reporting and request a score at the same time. While some individuals may not feel it is necessary to pay for their rating, the truth is that it is very difficult to gauge improvement without knowing the starting point. The credit report should be carefully reviewed for any errors and a consumer must ensure that all accounts are being reported properly. Several things to look for include missing payments, late payments, incorrect balances, and the presence of any collection accounts. After an individual has a good handle on what is actually influencing their credit score, it is much easier to devise a plan to help raise it.

Any errors that are found should be immediately disputed with each of the three credit bureaus. Even if the mistakes appear to be minor, such as incorrect balances, everything can quite easily add up and cause harm. Online dispute forms are available on the websites of the bureaus and the process is fairly simple.

Late payments can severely damage a credit rating, but it is possible to have the information deleted by the creditor and it really is not that difficult. If an individual has been able to make their payments on time for 4-6 months, it is almost always worth it to call the financial institution or lender and request that they quit reporting the delinquency that occurred in the past. If the company quits reporting the late payment, a score can immediately improve.

Credit cards with high balances can really cause a negative impact and cast a shadow on a credit report, but simply rearranging the debt can have positive results. Account balances should stay less than 50% of the total limit on each card, and a score is sure to increase. Having an excessive number of open accounts can also cause a rating to drop, but it is important for consumers to understand that they should only close accounts that have not been open a significant amount of time. A key component in the calculation of a beacon score is the length of credit history, so closing an old account could actually hard the credit rating instead of helping it.

Collection accounts are perhaps the most dangerous items to have on any credit report, but resolving them can help provide drastic improvements to a person’s credit score. The first step is to make sure that the collections are even accurate, and if they are not they should be disputed. If the accounts are legitimate, it is necessary to contact each company and inquire as to payment options. A consumer should never agree to pay anything until they have the terms of the agreement in writing. A pay for delete may seem to be a difficult concept, but it simply consists of agreeing to pay the amount in full if the collection agency or creditor will agree to stop reporting the account to the credit bureaus. Without this type of agreement, paying for collections will help the credit score a little bit, but it will still report for up to five years.

Although it may seem like a fair amount of work to improve one’s credit rating, the good news is that the results are readily apparent even without a need to borrow additional money. The lower insurance rates often will take effect fairly quickly and provide a reward to individuals that are willing to take the necessary steps.

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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