It seems to be impossible to improve your credit store; once it goes down, it seems to just stay there. However, there are a few ways that you can add some numbers to your credit score if you know how to do it. It takes time and dedication, as well as some sacrifices, but seeing your credit score go up is definitely worth it.
The first thing you need to do is go through your credit score and records to make sure it’s actually accurate. You’d be surprised at how often your credit score goes down because of companies reporting incorrect numbers about your finances. You have the right to see what affects your credit score and, if you find something is off, then contact the organization in order to get things fixed. It may take a while to do this, but it’s worth it.
Next, you should make sure you’ve paid all your debts off. The more debts you have (and the longer they go unpaid), the lower your credit score will be. The best way to do this is through a debt snowball: pretty much, you pay off the biggest debt first, throwing all your extra money at it. Once that’s paid off, pay off the next biggest debt until everything is done!
Along with paying off your debts, you also want to make sure to stay on top of other payments. If you have a history of missed payments (like insurance, mortgage, rent, etc.) and lots of late fees, then it’s going to lower your credit score. Start getting on top of your payments to make sure they’re paid off by the time they’re due. This will help you begin to build a good credit history, which makes you more financially reliable, increasing your credit score over time.
You’ll also want to consolidate and limit the credit cards you have and use. Every time you go to open a new line of credit, the inquiry is recorded. Lots of inquiries within a short amount of time can lower your credit score as well as reflect poorly on your financial situation. To the best of your ability, limit the amount of credit cards you have and how often you apply for new ones.
We all make mistakes, and often times, those mistakes can be reflected in our credit score. While there’s no way to completely erase your credit history and start over (wouldn’t that be nice), there are a few ways to clean up your credit. Here are just a few useful tips to help you get a new start on your credit!
- First off, you need to make sure your credit score accurately represents your use of credit. Believe it or not, it’s very possible for your credit score to have some negative data that simply isn’t true. Now, this isn’t because someone’s out to get you, but credit record keepers are humans. Yes, they sometimes make mistakes in the data that’s inputted into your credit score. So, if your score is lower than what you’d like, go through and check all the records. A recent study actually showed that one in five credit reports have material errors in them. That means it’s very possible that your bad credit isn’t your fault but simply a recording error!
- It’s really easy to approach your credit score and get lost in all the legal jargon and details that seems to surround it. However, there are a few laws that are important to understand when it comes to improving your credit score. You don’t need to be an attorney to understand these laws, either; they’re pretty straightforward. The Fair Credit Reporting Act requires that the credit bureaus to provide a free credit report to you each year if you ask for it. You shouldn’t have to pay any fees or charges just to know what your credit score is. The Fair Credit Billing Act means that—if any company or vendor charges you for something you didn’t buy, the incorrect amount, or some other unfair bill—you can both contest those charges and demand that they take charge in getting it cleared off your credit score.
- In order for negative information to be applied to your credit score, the company that reported it must have evidence to back that data. So, if you think the company incorrectly charged you or is lowering your credit score without sufficient evidence, then you can fight it. They have the burden of evidence and, if it can’t be produced, then you have the legal right to demand they remove the negative information. This can be especially effective if there was something in the distant past that is lowering your credit score. Because companies go out of business, merge, lose data, etc. over time, it will be harder for them to provide evidence of your bad credit. So, if you feel like some dark splotch has been on your credit report for too long, then go ahead and challenge it. The company is legally obligated to show evidence, which may not even exist!
- Another aspect of negative information on your credit score is that is has to be complete. These simply means that it has to accurately represent the whole situation, not just the bad part. For example, if you were billed something twice, but already paid it once, and the company reports the missed second payment as a negative, then that’s simply not fair. While just seeing that you missed a payment may look back, when the full picture is taken into account it’s obvious that it’s not your fault. There are actually lots of situations like this that get put onto credit reports and unfairly lower your credit score.
- You should also be aware that, for most negative data on your credit score, it can only be on your report for seven years. However, credit bureaus are notorious for not removing those spots from your score when they should be. So, go through your credit score and make sure it’s up to date. However, remember that bankruptcies stay on for 10 years and any unpaid judgments last 7 years or until the statute of limitations expires—whichever comes last.
- If you’ve looked over your credit report and think that there is information that is either inaccurate or should be removed, then make sure you have the sufficient documents to prove it. While the burden of evidence is heavier on the vendor or company to prove that the data is correct, you still need to have at least a small paper trail to speed up the process. Bills, credit reports, bank statements, etc. can all help you prove you point and get your credit score back up. Send the information to both the creditor that’s reported your bad credit and the credit bureau. Hopefully it will stick with at least one of them. Many credit experts suggest that you do this whole process via snail mail because it guarantees your right to see the vendor’s evidence that backs up the negative data. If you contest the information over the phone or on the Internet, then you may lose some of those rights.
- While all of this advice is great for improving your credit score after it’s been dealt a bad blow, I always like to say that it’s better to be prevent something bad from happening than having to fix it later. So, instead of letting your credit score fall low, stay on top of it so it never gets low! You can do this by periodically ordering your credit score and analyzing it, or enrolling in a free monitoring service that gives you monthly updates. Program like Credit Karma not only give you access to your credit score, but they also update you when changes occur to your score or other important things happen.
Your credit score and credit history will affect you throughout your entire life. It is worth the time and energy it requires to check your credit regularly, to be sure that it reflects accurate information. Also, do what you can to fix your credit score by either paying off bad debts/liens, contacting creditors to fix an error, or to simply start anew. Be sure you are making payments regularly and don’t get behind on loans or credit cards. Be sure medical bills are paid before they are sent to collections. Also, if you don’t have any credit accounts, this can negatively affect your credit score. Apply for a credit card and use it regularly. Don’t carry a balance that is close to the credit limit. It is recommended that you stay below 50% of your credit limit in order to maintain the highest credit score you can. Don’t be late on any credit card payments. If you apply for a loan, pay the loan regularly as required, but be sure not to pay it off within 6 months so that it is recorded on your credit history. When possible, be sure your name is on loans that you are involved in and be diligent in paying them by the due date.
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