If you use the Internet and have an email account then you have probably already been inundated with thousands of spam messages and pop ups begging you to log in to receive your free credit score. While there are thousands of offers out there, there are two things that always remain constant when it comes to your credit score.
Your score is utterly important if you want to invest in a car, house or any major asset, and most of those ads and emails are pure scams that will waste your time and possibly your money. So keep those emails in your junk mail folder, stop wasting your time, and read along to learn some valuable steps you can engage in to increase your credit score and improve your financial situation.
1. Focus on your Credit Card Debt
There is one very common mistake that a lot of people tend to make when trying to improve their credit score. That is, to try and pay off all their loans and debts at one time. While it is true that paying off other installment loans may help your situation in the long run, focusing on paying off revolving accounts can give you a lot more help immediately. Most lenders will focus on the gap that exists between the amount of credit you are in fact using and the amount you have available.
If you can find a way to lower your balances to less than 30% of the limit, you will find that it can have a huge impact on the way lenders consider your proposal. This does not necessarily mean that you should try to work off your highest-rated card first. Take baby steps and pay down the cards that are the closest to their credit limits.
2. Research Your Actual Limits
In most cases, people often find that their credit score is lower than it should be due to the fact that a lender may be showing a lower limit than you actually have. If your limit is showing up as lower than it actually is, it could appear to some lenders that you are maxing out your limit each and every month. If the limit that is showing up is wrong, you can call your credit card company and more than likely they will update it almost immediately. However, if you are simply maxing out your limit, then you need to do something to push it up.
Some people opt for a wild spending spree that leaves their credit card company no choice but to raise the limit, but this is obviously not the best way to go about things. What you should do is check your statement and find the exact date for each month’s closing period. Now what you need to do is pay off as much as you can about a week before the closing date comes. This will not raise your card limit but will put some extra cushion in that gap between your limit and your closing balance, thus improving your credit score.
3. Give Your Old Credit Cards Some Much Needed Attention
When it comes to credit the older your card is, the better. If you have been neglecting your older cards recently then the information they hold may not be reported to potential lenders and thus will not have any effect on your credit score. Even if they do appear, they will not be looked at closely and will be ignored if they are not being used. While it isn’t necessarily wise to be using a whole host of cards all the time, try bringing out an old card and using it for some smaller purchases. This will ensure that the good credit attached to that card is still relevant in the credit score process which can really give you a much needed boost with lenders.
4. Do not Neglect the Past
While it is best to forget and move on when it comes to many things about your past, this does not relate to your credit score. If there is an old charge against you or you had an old account go to collections, you can try to dispute it as much as possible. Protest that the charge was unjust or you were unaware of it and some bureaus may let it go away. The older a collection account is, the easier it may be to get the credit bureau to forget about it, especially if you make it a hassle for them. You may have some luck annoying them enough that it isn’t worth their time to report the issue, and thus your credit score will not be left lower than your IQ.
In hindsight there are quite a few things that you could have done differently had you known the effect your decisions would have on your credit score. While there is no way to go back in time and correct your mistakes, there are a few steps you can take towards doing some damage repair. Start making smart financial decisions, use your credit cards less, and try to keep your credit score in mind when making purchases or paying bills. Simply reminding yourself of your score can go along way in helping you take better care of your finances in the future. Good luck and remember that just because your credit score is low, all is not lost.
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