Good credit is absolutely vital in our country. Many mistakes are made and well documented in handling credit yet no one would argue how important it is to maintain good credit habits. The following is a few basics that will help you improve your scores.
Step 1: Determine what needs Improvement? Your first order of duty is to determine exactly what derogatory and incorrect items show on your credit report. There are several ways to accomplish this but the easiest is simply going directly to the source. There are 3 credit bureaus that creditors use. They are as follows; www.equifax.com, www.transunion.com, and www.experian.com.
Make sure that you order your reports from these three bureaus and not go to any free credit report offer. Many times you will find that the report is not free and they do not offer your score either. They are primarily interested in upselling you into some sort of monthly credit monitoring plan.
When you receive your three reports take the time to review each one individually. Each credit repository reports your score based on a different matrix and some creditors do not report to all three bureas. Make note of any item that is reflecting as late or is listed as a public record.
Step 2: Dispute. When you begin the dispute process always write your dispute letters in your own words. Do not use the forms provided by the bureaus. Disputes are handled by real people and should be treated as such. Employees at credit bureaus are trained to sniff out credit repair companies and false disputes so you are always better off putting the dispute into your own letter in your own words.
Go after all the incorrect information on your credit report. You can see a quick jump in your credit score by simply correcting false information. If, on the other hand, there are items on you rreport that are yours then you are better served by contacting the creditors directly. Many creditors will remove derogatory information at the request of a current client.
Step 3: Sit it out or Pay. Eventually almost all derogatory credit will come off your credit report after 7 years. In some cases you are better waiting it out then investigating. If you are close to the 7 year period then investigating the account could reactivate the derogatory and you will see an immediate drop in credit score. So take care in disputing an item that is old and that you cannot prove to be incorrect.
Another thing you can do to improve your scores immediately is to pay down current credit items such as credit cards with higher balances. A good rule of thumb is that your balances should be no more than 50% of your available credit and preferable as low as 30%. If you have one card with a zero balance and another with a higher balance then you are better off transferring a part of that balance to the free and clear card.
Step 4: Be careful establishing new credit or closing old accounts. Most people don’t realize that a simple act like closing out an old account that you have not used for a while can lower your score. One of the contributing factors to your score is the length of time your credit has been established. That means that older accounts, even those no longer used, will have a favorable effect on your credit score. Never close out old especially if you are in the process of applying for a mortgage or loan.
By applying the strategies I’ve outlined here you can fix or maintain your credit. In some cases, working with a credit repair agency is worthwhile but before you do these simple steps can put you well on your way to excellent credit.
Tags: Mortgage-Refinance