But there is no quick fix. Repairing a damaged credit score takes time. There are plenty of easy ways to raise that score, but they all take time.
You need to know what your credit rating is. This will be a number between 300 and 850 that reflects your creditworthiness. There are many factors that go into this score, including your payment history and debt to available credit ratios.
Start with your current credit reports. If everything is positive on them, you will most likely have a fairly decent credit score. You can receive a free credit score from each of the three credit reporting agencies every year. Go to www.annualcreditreport.com for more information on how you can get your credit report for free.
Your credit report will not come with a credit score, you must purchase this separately. It will usually cost you around $5 or $6 for each report. Each agency can have different information on their report. And each uses a different scoring method for your credit score. Don’t be alarmed if you see as much as a 50 to 100 point difference between scores. This is normal.
Know that you know your score, you can work on improving it. The most important thing you can do to increase your credit score is paying your bills on time. By paying your bils on time, you can raise your credit score significantly over the next several years. You must make these payment on time to raise your score. It is the easiest and simplest way.
Missing even two bill payments can have a terrible effect on your credit score. Your recent history is far more important to lenders than your history five years ago. Even if you have pristine credit, missing a few payments can drive your score drastically down. Some credit card companies are using missed payments on your credit report as a reason to immediately raise your credit card interest rate. You have to pay your bills on time.
You can also improve you score, and your money situation, by paying off some of your debt. The less debt you have, the higher your credit score will be. You need to let the zero balance on a card sit for over a month. The fact that you might pay off the entire balance each month is usually not reflected in the balance reported to the credit bureau. The amount you charge each month will be seen as a balance on your report, therefore, raising your credit score.
There is a lot of debate about closing old credit card accounts. Many financial experts will tell you to do so. Some say that open accounts are an invitation for identity theft. Other advisers say that closing old accounts lowers the amount of credit you have available. This makes the outstanding balances you have with other accounts much closer to the maximum credit amount you have. This can lower your credit score. Plus, if you close really old accounts, you are shortening your credit history, which negatively affects your score.
While often credit counseling is reported to the credit bureaus, it does not factor into your credit score. Plus, once you complete the program, most agencies will remove any references to credit counseling from your report. But be aware that any credit counseling firms that work in debt settlement will negatively impact your credit score.
Anytime you pay less than what you owe, you will see this impact on your score. You should also try to avoid bankruptcy. This will move your credit score into the very bad level, meaning that future reasonable interest rates will almost be impossible. You will still be able to get credit, but you will pay dearly for it. The interest rates will be absolutely outrageous.
There are no quick fixes, but the fixes aren’t difficult. Pay on time and reduce your debt. You can increase your credit score in two simple steps. Good luck.
Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!
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