Small Changes Make Big Improvements in Your Credit
What's your report like?
Almost everyone has one, you know. A credit score/report, that is. Unless you’re virtually off the radar – in which case nobody will touch you for credit anyway – your credit report says more about you than you might think. It tells financial organizations about your financial history. It lists how you’ve handled such things as credit cards, loans, and other financial matters. It lists how well you’ve paid, how much you’ve paid, how late you’ve paid. The numbers on that little report can make or break your financial situation.
The credit score itself is just a number. It’s calculated from all the information contained in your individual credit report. Confusingly, and somewhat annoyingly, 3 different credit scores are available. A combined score from all of them, available through Experian, Equifax, and Trans Union, make up something known as your FICO credit score.
So, what’s the big deal?
Every time you apply for a credit card, buy a house or take out some kind of loan – to buy a car maybe – the credit score is looked up and taken into account. There are even some jobs that want to know what your credit score is, before they’ll employ you. If you want to rent somewhere to live you’ll find that most agencies want to take into account you credit score. Your “eligibility” to rent may depend on it. If your credit score is poor, you will find a great many things can be more difficult for you, sometimes downright impossible. In short, a low credit score is a bad thing.
Fortunately, you can sometimes repair, or improve your credit rating and some of the steps are pretty simple. If your credit score is affecting you in some way, with a bank, lender, apartment agency, or employer, you may just have to do what you can to improve your credit score.
Strategies for improving your credit score:
1. The first thing to do is find out just where you are – what is your credit score. To do that you need to get your credit reports and you’re entitled to one free copy of each credit report every per year. Get hold of them by contacting each of the credit bureaus individually, or through their official website, annualcreditreport.com. Your credit reports give you a pretty lengthy explanation of what is having a negative impact on your credit score. Once you know what’s causing the problem(s), you can start to make any necessary changes.
Your credit report will give you the information you need on each account you owe on, including who you owe, how much you owe, and a snapshot of your payment history. Past credit accounts may also be included.
2. Get hold of your credit scores. Your credit scores are numerical values placed on your credit history and can range between 350 and 850. Each credit bureau can have a unique score, but they’re combined to create a single FICO credit score. Obtain your credit score at least every six months to keep track of how it changes over time.
Obtaining your credit scores typically costs money, but can be done through each credit bureau individually.
3. Create a plan. Once you know what you’re up against, create a plan to help you deal with each record on your credit report. Address each record individually and develop a plan for repayment or dispute depending on the legitimacy of the debt.
4. Dispute incorrect information. This is a big one. You’d be surprised how many people find that old, or inaccurate information is listed against them.
If there are incorrect records in your credit report, dispute them. Dispute each one individually through the credit bureau or contact the creditor for more information on the debt. If the information really is wrong, the credit bureau have to make the necessary changes or removals.
5. Pay off your debts. Pay each debt off one by one.
Yeah, we know it’s not easy, especially if you’re already struggling, but honestly sometimes the only way to deal with a situation is to deal with it.
You may wish to quickly eliminate your smallest debts first and then focus on the larger ones. Contact each creditor individually to come up with a plan for repayment.
6. Follow up. Continue to check on your credit scores and reports, and follow up with creditors to keep track of your progress.
7. If you don’t already, start to pay your bills on time. This is one of the quickest, easiest and most significant ways you can improve your credit. Plus, you can start building good credit right away by paying this month’s bills on time. Make a plan and budget appropriately so you have the funds in order to pay them before the due date.
If you take small steps regularly toward improving your credit, you’ll see a big impact one day. The longer you have a positive credit experience, the higher your score will go.
Work on repaying your debts over time and you’ll see your credit score rise along with your progress.
Nobody said it was going to be a walk in the park, but it we can all start somewhere and make incremental changes. They add up, quicker than you might think.
