Raise Your Credit Score
Having a poor credit rating can affect you for a long time. Interest rates on home and car loans will be higher, and getting a credit card with a fair interest rate can be close to impossible. Repairing and raising your credit score can be a long process, but in the end can be very rewarding.
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To begin raising your credit score, get a copy of your credit report. Every year, you are eligible to receive a free copy of your credit report. You can request a copy by submitting a written request to each credit reporting agency, or you can go online to annualcreditreport.com and requesting a copy of your personal credit report. Once you receive a copy of your credit report, review all the information contained in the report. If there are any mistakes in the personal information section of the report, it is imperative that those errors are corrected. You will also want to review the account history. Make sure all of the accounts listed are your debts. If there are accounts listed that are not yours, you will want to file a dispute and have them removed from your credit report.
After going over your credit report, you will want to begin raising your score. Start ensuring that all of your installment loans and credit cards are paid on time. Your payment history makes up about 35% of your overall credit rating, and by missing only one month's payment your credit score can be lowered by 50 to 100 points. By paying these types of debt down on time month after month, it will improve your credit rating. You may also want to consider paying more than the minimum balances on your credit cards. By paying more than the minimum balance, it will reflect well on your credit report by proving your ability to pay.
You will also want to begin paying down your current debt. By paying down your current debt, creditors can see that you are making the effort to reduce you debts. Credit card companies and installment loan issuers report your payment information on a monthly basis to credit reporting agencies. When consulting a lender for a loan, many lenders like to see that there is a large difference between the amount charged on the credit card and the total credit extended to you by the credit card company.
Staying out of bankruptcy is the best thing you can do to raise your credit score. A bankruptcy on your credit report can drop your credit score by as much as 200 points. If needed, consult a credit counseling agency to help straighten out your finances and get back on track.
