Advice on How to Raise a Low Credit Rating
Millions of people across this country struggle with the effects of having a poor credit score. Some are turned down for credit cards or car loans, others find out their applications for mortgage refinancing have been rejected. If you are experiencing the limitations that get imposed on people with poor credit, you may already know your credit is in need of repair. These days, getting information about how to fix your credit score doesn’t have to be frustrating or stressful, thanks the wealth of credit information and resources available to consumers.
Tips to Improve Your Credit
Credit scores are a tool used by businesses and lenders to determine the likelihood a borrower will repay a loan. Fortunately for those with lower credit scores, this rating is not set in stone. Although it can take time, there are many things you may be able to do to increase your credit score.
* Pay your bills on time – Payment history accounts for 35 percent of your credit score. A period of not making your payments on time can cause your credit score to drop but since the impact of a late payment diminishes over time, being careful to make all payments on time going forward will move your credit score in the right direction.
* Get current on missed payments – If payments are already past due, their impact on your credit rating will become more devastating the more time they remain unpaid. A couple of 30 day lates are excusable, but just one 90 day late payment can cause your credit score to come crashing down.
* Contact your creditors if you are having a hard time making payments – If you foresee that you will be unable to stay up to date on loan or credit card payments, you may be able to make arrangements with your creditors such as extending the loan period that will help you get back on top of things. You could end up paying more in the long run, but if it keeps you from getting further behind, it will be worth it for your long term finances and for your credit score.
* Try to keep low balances on your credit cards – Outstanding debt makes up 30 percent of your credit score. The closer you are to maxing out credit cards, the less stable your finances will look to be. Keeping credit card balances below 30 percent of the available limit will make your credit utilization ratio look better which is a good thing in the credit scoring model.
* Avoid rotating your debt on credit cards – Transferring debts to a lower interest rate card is a solid strategy when trying to whittle down debt, but a history of moving balances between cards looks like you are robbing Peter to pay Paul in lieu of of being able to make your monthly payments.
* Carefully study loan or credit applications before accepting them – Some loans, including retail store lines of credit, are loaded with fine print and other strings attached that can end up causing big problems down the road. For example, some no payment, no interest financing programs offered by retailers include interest rates that can skyrocket if you are late on a single payment and clauses where you may still be responsible for interest accrued during the “no interest” period.
- Look into credit repair services people who need additional assistance addressing their bad credit, an excellent resource for consumers are professional credit repair services. Professionals can lend their valuable expertise on important matters like disputing the questionable negative listings on your credit report and specific steps you can take to make the most of your credit score.
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