How to Improve Your Credit Score
To improve your credit score can seem like an impossible task. The scoring model seems to factor in tons of information and makes it seem as if you have no control over your score. This is incorr...
To improve your credit score can seem like an impossible task. The scoring model seems to factor in tons of information and makes it seem as if you have no control over your score.
This is incorrect. If you take a few steps you can positively influence your credit score.
1. Disputing and removing bad credit items on your report. You can do this yourself or hire a service but it will help your score the most.
2. Pay off any verified bad credit item on your report. In exchange for your payment have the lender remove the item from your credit report.
3. Pay your bills on time. It is estimated that missing a payment can damage a good score by up to 50 points.
4. Open a new credit line. This is best if it is a revolving line of credit, for example an unsecured credit card.
When you make your monthly payment you will be creating a positive payment history. This is a very large part of your credit score. If you have difficulties opening an unsecured credit card then get a secured card. Double check and make sure your credit card is reported to all three major bureaus.
In addition try to keep your monthly balance at 10% of your available credit. Doing this shows the bureaus that you do in fact use your credit and you use it responsibly.
5. Pay off large debt. Your score will get a bump if you have high available credit to debt. The bureaus want to make sure you are not overextended and by showing them you have available credit your score will get a bump.
These five factors are the only things you need to concern yourself with when trying to improve your credit score. There is one last factor however it is shadowed in controversy.
6. Piggy back credit, this is when you are added as an authorized user on an account with a high credit limit and low balance. The benefit you get is the account is not reported on your credit history.
This tactic has been widely abused and the scoring model has adjusted its formula to discount authorized users. However there is a debate over if this change has occurred yet or not.
In sum if you can take care of steps one through five then you will improve your score. With a high credit score your quality of life will also improve.
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