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Rebuild Your Credit Score |
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by: Debbie Dragon
Today, more and more people are struggling to make ends meet. People who once were able to live a luxuriously or at least a comfortably are finding that they cannot live up to their previous lifestyle. People all over the country are struggling and many people have found themselves with mounting debt, missed payments and as a result a lower than desirable credit score. If this sounds like you, you are not alone. Low credit scores appear today to be the norm, not the exception. If your score is less than what you would like it to be, there are things you can do to raise it.
First, get a copy of your credit report and your credit score. Take a close look at it and check for any errors. Some errors do not have very much impact on your score, but others certainly do. Errors that you will want to pay immediate attention to include any reports of late payments or accounts in collections that are not true. Check each of your credit card accounts and make sure that your credit limit is correctly reported. If your limit is higher than what is listed call you credit Card Company and get then to update it. Pay attention to any accounts that state they were unpaid, settled or paid as agreed. If these accounts were paid in full, you will want to get them corrected. Finally you will need to get any negative reports that are older than the limit, usually 7-10 years off removed from your report. These are supposed to fall off automatically, but many times they don’t.
You will also want to be taking steps to pay down your debt. Continue to make all of your regular payments to your mortgage company, on your auto loans and student loans. Paying down these loans early will not have a huge impact on your credit score. Paying down your credit card debt however will make a difference and the faster you do it the quicker your credit score will start to rebound.
Your immediate goal will be to get each of your credit card balances below the 30% limit of that particular credit card. People who are working to get out of debt are often told to pay the card with the highest interest rate first, but if you are looking to up your credit score you should concentrate on the card that is closest to its credit limit first.
If you must use a credit card, use it as infrequently as possible while you are trying to raise your score. Even people with high credit scores that are looking to maintain them should use their credit cards with care. When at all possible never charge more than 30% of your total limit in any given month. Even if you pay your balance in full each month you still want to follow this important tip. Each month your credit card company will report your previous month balance, not what you paid on it. Your score is not reflective on what you paid but rather on what percentage of your available credit you have used.
Another way to boost the score is to use your old credit cards. Long term credit helps to boost your score. Many times if you have not been using a card, the credit card company will stop reporting it to the credit bureaus. You want them to report, so your score can reflect your credit longevity. Just making a couple of purchases a month and paying the balance in full each cycle will do the trick.
Finally, be careful to avoid common misconception pitfalls that could actually hurt your score. Never close an account or ask a creditor to lower your limit. Don’t miss payments or make any payments late. This can hurt your score more than you might think. Finally, don’t open new accounts unless you really need them.
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Credit Card Articles > Credit Report and Credit Score > Rebuild Your Credit Score
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