Your credit scores affect your life in many ways. Not only do the scores affect your ability to borrow money for a home, car or college, but in some situations your scores also affect your ability to rent an apartment or to get a job. Even if you have filed for bankruptcy or have a foreclosure on a credit report, there are still things you can do to improve your scores within a short period of time. And if you have a good credit score, there are ways to make it even better.
Get Copies of All Credit Reports
Contact TransUnion, Experian and Equifax to get copies of your credit reports. You can request copies online, by phone or in writing. Although you get a free credit report every year, more and more experts recommend getting copies semi-annually or quarterly because of the risk of identity theft.
Check each report carefully and look for any incorrect information such as accounts that don’t belong to you and debt you have paid. If there are mistakes on the report, contact the credit reporting agency by calling, writing or filling out an online form. Each agency has a legal responsibility to investigate all disputes and then remove any errors that it uncovers. This correction raises your credit scores very quickly. If the reporting agency states that the disputed item is correct, it remains on your credit report. You then have the ability to write a short message about the dispute to add to your credit reports
Pay Bills on Time
Something as simple as paying your bills on time, especially credit cards or loans, is a very effective way to improve your credit scores. There are other things you can do as well. If you know you will be late with a payment, tell your creditor ahead of time to make a payment arrangement. Also ask the creditor not to report the late payment to the credit reporting agencies. There is no guarantee the creditor will comply, but it is worth asking to prevent your credit scores from taking a hit.
Pay Off Credit Cards
Each month try to pay more than the minimum amount due for credit card payments. If you can pay the full balance, that is even better. The sooner you pay off your credit card balance, the faster your credit scores increase. Another way to improve your credit scores is not to use your entire credit card limit. Financial experts suggest only using 25% of your available credit limit. For example, if your limit is $10,000 maintain a balance of $2500 or less.
Don’t Use Debt Consolidation
Many people mistakenly think that debt consolidation is a good way to pay off large debts. Credit card companies make it easy for you to transfer all of your debt to one card. While this may seem like a good idea, consolidating debt actually lowers your credit scores. The major credit reporting agencies see only a large balance on one card that exceeds the 25% balance to limit ratio. It is better to have your debts on several cards instead of just one. The best way to raise your credit scores is to pare down the balances on each credit card or loan as quickly as possible.
Use a Credit Counselor
If you have serious problems managing your money and paying off your debt, consult with a reputable credit counselor. Many non-profits offer credit counseling services as a way to help people get out of debt. Some credit counselors can even help you get a lower interest rate on your loans. By using the suggestions of a good credit counselor, you can increase your credit score in a short time.
With all the benefits associated with a high credit score, it is imperative that you do what you can to raise your scores. Learning about money management and living within your means is a good way to increase your credit scores and improve your financial future.