Have you noticed lately that your request for loans and/or credit cards is being denied repeatedly? The financing rates offered to you are abysmally high? This could be a sign of poor credit that needs improvements. Building credit is not something that happens overnight. You need to work towards it by using a meticulous process. In this article, we will discuss some important tips to help you improve your credit score.
Check the Accuracy of your Credit Reports
First things first, before you look deeper into how to improve credit score question and embark on the journey of rebuilding your credit score, make sure that the numbers on it are accurate. Believe it or not, some credit reports have errors on them that could be affecting your score.
There are three credit reports provided by credit bureaus namely, Experian, TransUnion, and Equifax. If studies are to be believed, one in five consumers had an error in one of the three reports. It is possible that your score is suffering for no fault of yours.
Since your scores are a product of data on these reports, it is extremely important to ensure that all the information is accurate. If there is a discrepancy, it will reduce your scores, impacting your creditworthiness in the eyes of lenders.
It is very easy to check your reports from these credit bureaus as you are entitled to a free copy each once every year. Anything above 750 is an excellent credit and below 600 is considered as bad credit. You can request all these reports and cross-check to validate each transaction. You can also make a checklist to identify errors if any. Use a highlighter to mark discrepancies that you can later report to the bureau for correction. If you find an error in each report, then you would have to notify them individually. You will also be required to file a dispute on these errors. You can either do it yourself or use a professional’s help to repair your credit for you.
Identify the Improvement Areas
Sometimes an error alone is not responsible for impacting your credit score. For instance, if your name has not been spelled correctly on the report, then it is not likely to cause your credit score to shrink.
Things like identity theft, a collection account from years ago still showing on your report, your ex’s unpaid bill, a loan default showing up as multiple defaults on your report, a mix up of your credit report with someone else, etc. are classic examples of errors that can take your credit score down. Another factor responsible for affecting your credit score is a history of late payments or if your creditors treat you as a high-risk account because this is the first time you are applying for a loan or a credit card.
Once you have the correct improvement areas mapped out, then you can work towards fixing the errors and improving your credit score.
Have a Plan of Action
If you find that your credit report has no errors but you know that your score has been impacted because of your own mistakes, then it is time take corrective measures immediately. Before you get started, it is important to have a plan of action.
In an effort to improve your credit scores, you should first sort your credit card balance. You should also tackle all your debts and think of a way to pay them off rather than revolving them around. Avoid closing any maxed out credit cards in an attempt to close the account. This looks very bad on your credit report. Finally, avoid applying for any new loans or credit cards as each hard inquiry takes away some points from your credit score.
Avoid Late Payments
Closing an account is no way to remove late payments from your account. The only way to do it by making all your payments on time. If you are someone who forgets the due date, then set payment reminders and sort your payment schedules to avoid any late payments. You can also change the due dates on bank websites to align with your paychecks. This way you can ensure that you pay your bills the moment you get paid.
Following these basic tips will not only restore your credit scores but also help you save tons of money in the long run. Don’t give up if your credit score is poor. You can use these simple tips to get back on track.