Knowing your credit score is always the essential fundamental of repairing credit. But it is even more important to know what affects your credit score. And even more significant than that is knowing what you are able to do to improve your credit score.
Getting your free credit score
Due to a financial reform, helping your credit score is easier. 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 recently passed financial reform bill ensures that you are able to get a free credit report that consists of your credit score once per year.
Credit score low?
A lot of people don’t know how their credit score is affected by themselves. For instance, it was reported by Wallet Pop that many individuals assume if they pay their bills on time, their credit score is good. The truth is, 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. When improving credit score, your first priority is tackling excess credit card debt.
Pay down credit cards first off-credit card repair
You have to pay down credit card debt first to raise your credit score. There are two basic types of debt. Installment debt is secured by many collateral, like a car loan. Revolving debt is your credit card balances. Credit card can revolve forever which isn’t really good. Since credit card balances are unsecured, credit report companies like FICO say they’re more risky than installment loans. So paying off your credit cards will do more to raise your credit score than paying off your car.
College agencies should be paid off last
Unfortunately, if you’ve been taken to collections, your credit score is already hurt. Paying the collection agency won’t change 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, the payment won’t erase the delinquency. Keep in mind that a surprise call from the collection agency can result from missed payments on anything from utility bills to library fines. Avoid collection within the first place.
To charge cards, say no thank you
To keep your credit score from dropping, keep refusing that charge card each and every department store tries to sell you. Your credit score can be lowered by opening and closing credit accounts. 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 end up getting 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.
Don’t cancel your credit cards
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. When you cancel a card, the line of credit it carries goes away. With less credit available, your credit score goes down. Just zero the credit card out and put it inside your dresser instead. New credit card rules prohibit all of the credit card companies from canceling cards you don’t use–which used to hurt your credit score–so you don’t have to worry about that anymore.
Use loans wisely
Taking out an installment loans for bad credit for credit repair is risky, but it can work to pay back credit card debt with personal discipline. For those who have a bunch of maxed out credit cards, the new installment loans won’t negatively impact your credit score too badly. For this strategy to lower your credit score, you are going to have to make yourself settle the credit card debt with the installment loan, and throw the credit cards within the drawer until the installment loan is paid off.
More about this topic at these websites:
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
