Improving Credit

Credit scores dictate everything from finance rates to background checks. Some jobs check your score before hiring you thinking that if you have bad credit you may be unreliable as a employee. The rate that a person receives for insurance and to get a loan are determined by the score you receive from the credit agencies.

In order to start on the journey of improving your credit score we should start with getting a copy of your report. Having a copy of your report gives you a blue print of what needs to be worked on and what mistakes need to be repaired. I know it sounds odd but yes the agencies can and do make mistakes on your report, and it is up to you to find and repair them.

Having your credit report will show you what debit you have and what needs to be cleared up to get back on track. On the report there should be numbers to all of your creditors, call them and make arrangements to get these paid off. Don’t be scared to ask for a small break on the debt it is not uncommon to get a break on some of the interest.

Paying your credit card bill on time and keeping it at least within half of your limit is crucial in this process. One late payment on you credit card bill can lower your score by upwards of a hundred points. When determining your score the agencies go by a debt to income ratio. If your cards are maxed out this will lower your available credit and drop your score. So keep the balance low and even if you can only pay the minimum make it on time.

When applying for a credit card your score will receive a small drop in points. Don’t apply for cards you don’t need, and make sure if you are trying to get a loan for something it is five to six months after applying for a card. Applying for various accounts of credit within a short period of time looks desperate and will also lower your score. If you are trying to get a deal on a mortgage for your home or car loan let the agencies know. If the agencies know that you are searching for a good interest rate they can bunch up various applications for credit as one item. This makes it not look so needy for credit and will not damage your score.

Using cash only will not improve your score by any means. If you pay for everything with cash you will not build a trail of credit. Showing on time payments for items builds credit. If you do not take anything out on credit you will not prove your ability to make payments on time. This does not harm your score, but it also does not improve it. Sometimes having bad credit is better than no credit. Try to go out and open some good lines of credit and start building a good credit trail.