Knowing your credit score is the most basic fundamental of credit repair. But it’s even more significant to know what affects your credit score. Knowing how to proceed to improve your credit score is even more important.
Resource for this article: Know your credit score, and take steps to raise the number by Personal Money Store
Getting your free credit score
Thanks to financial reform, doing something about your credit score is easier than ever. Free credit report services are all over the internet. Until now, those free credit reports didn’t include your credit score. You had to pay extra for that. But part of the lately passed financial reform bill ensures that you are able to get a free credit report that contains your credit score once per year.
A very low credit score?
When it comes to credit repair, a lot of people don’t know how they affect their credit score. For example, as outlined by Wallet Pop, many individuals assume if they pay their bills on time, their credit score is good. Even if you always pay on time, when your credit cards are maxed out, your score is lower than it should be. When credit bureaus see borrowing to the limit, they see risky behavior. Tackling excess credit card debt is your first priority when improving credit scores.
Credit repair – pay off credit cards first
You have to pay off credit card debt first to raise your credit score. There are really only two types of debt. Installment debt is secured by collateral, like a car loan. Revolving debt is your credit card balances. Credit card can revolve forever which isn’t good. Since credit card balances seem to be unsecured, credit report companies like FICO say they’re more risky than installment loans for bad credit. Paying off your cars won’t do as much to raise your credit score than paying off credit card debt.
College agencies should be the last to settle
Your score is already hurt if you’ve been taken to collections. Paying the agency won’t change any of the numbers. According to Bankrate.com, by the time your debt goes to collection, your creditor has already written you off. Although paying the collection agency will end the harassment, it won’t erase the delinquency from your credit report. Bear in mind a surprise call from the collection agency can result from missed payments on anything from utility bills to library fines. The key to safeguarding your credit score is to avoid collection in the first place.
To charge cards, say no
To keep your credit score from dropping quite a bit, keep refusing that charge card every department store tries to sell you. Opening and closing credit accounts will lower your credit score. Wallet Pop said FICO credit bureau research has found that opening any type of credit account is automatically seen as more credit risk. If you do get that charge card and pay it off in full, your credit score will rebound in a couple of months, but it won’t rise above the level it was before you bought that new outfit.
Credit cards not canceled
Sometimes when it comes to credit repair, it looks like the deck is stacked against you. Especially when it lowers your score to cancel credit. The line of credit carried by a credit card goes away when canceled. Your credit goes down with less credit accessible. Instead of canceling, just zero the credit card out and throw it as part of your dresser drawer. New credit card rules prohibit all of the credit card companies from canceling cards you do not use–which used to hurt your credit score–so you don’t have to worry about that anymore.
Wisely use installment loans
Applying for an installment loans for credit repair can be risky, but it can work to settle credit card debt with personal discipline. If you have a bunch of maxed out credit cards, the new payday installment loans won’t negatively impact your credit score as much as those debts. For this strategy to lower your credit score, you’ve to make yourself pay back the credit card debt with the installment loan, and then you will have to throw the credit cards within the drawer until the installment loan is paid off.
Find more data here:
Wallet Pop
walletpop.com/blog/2010/07/07/good-credit-score-secrets/
Bankrate.com
bankrate.com/finance/debt/3-easy-ways-to-rebuild-your-credit.aspx
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