Improving your credit score and repairing your credit rating is not difficult. It isn't necessarily easy, but the process is formulaic, governed by specific Federal oversight laws, and only really requires that you are willing to put in the effort to complete the steps and stay focussed and on target to improve. Credit score based financial decisions require this. Even if you consider yourself a financial shipwreck, there is help for bad credit, much of it free provided by state and Federal agencies, and there are many reputable credit advisory firms, as well.
Repairing Your Credit Rating
If you do not yet have a copy of your credit report and you are on the path of do-it-yourself credit repair, your first step is get a copy of your credit report. The Fair Credit Reporting Act (FCRA) requires that the three national credit reporting agencies provide you with a free report once a year. You can order this online at annualcreditreport.com or by calling 1-877-322-8228.
Your credit score is a three digit number calculated by a mathematical algorithm based on the information in your credit report. The number itself was first created by the Fair Isaac Corporation, not known as FICO. A credit score, or FICO score, can range from 300 to 850. If you occupy the lower range, you will use your credit report to begin the repair. Your credit rating and score and how you improve it will start from with the contents of your report. The steps how to do this follow. and as
How do I Improve My Credit Score?
1. Correct your credit report. Circle every item on your credit report that you disagree with, and next to the circled item, write, "I contest this." Return the credit report with documentation that supports your position for each item that you disagree with. Most accounts over seven years old must, by law, be removed.
2. Contact your creditors. If you feel your creditors have reported false or otherwise incorrect information, send them a statement in writing saying so and provide them with proof of your position.
3. If you find items in the the credit report that are correct but lacking information, then provide an addendum to your file and demand that the credit reporting agencies include it in your file. They are required by the FCRA to comply and include that with your credit report.
4. Pay your bills on time. This speaks for itself. Basically, cease all activity that would lower your credit rating such as leaving bills unpaid. Do not spend money that you don't have or put more on your credit cards than you can realistically pay off.
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5. If you have more than one credit card, keep the balance low. If the balance is high, tighten your belt and pay it down and keep it down. A low minimum level of credit card debt will actually work in your favor over time because it will show that you can handle debt responsibly. Basically, by maintaining a low level of debt over time, you are adding positive information to your credit report that shows financial responsibility.
6. Leave credit accounts open. Intuitively, you may want to close unused accounts. One strategy that can actually work in your favor is to leave those accounts open. The reason for this is that the credit reporting agencies will see that your total amount of available credit. The more credit available to you, the better. You don't need to use it, just have it available.
7. If possible, take out a small loan. How soon you'll be able to do this will depend on the state of your credit. The idea is to take out a small bank loan that you can easily pay off. This helps establish a positive event on your credit history, and demonstrates that you can pay back debt.
8. Apply for loans and credit cards in the same approximate unit of time. The period of time you want to work with is about two weeks. Every time a potential lender, such as a bank or credit card company, accesses your credit report, your credit score drops by a few points. Try to keep all demands on your credit report within the same two week period of time so that each of the separate requests will be considered as a single request.