I believe we all know that our credit score has a direct correlation with the interest rate we will have to pay when we borrow money. Credit score is measured into 300 to 850, the higher your score the better it is for you. If your score is low, you will most likely have a hard time to get a loan, if you can get it then the interest rate will be higher. That is why it is very important for us to keep our score high. And if currently you have a low credit rating then you will have to put some serious efforts to rise your credit score. It is not an easy task to improve credit score, but there are always ways you can follow to make it happen. Here are simple tips you can adopt to start your credit score improvement campaign.
First, find out what is your credit score. You can get this information from FICO that is a system developed by the Fair Isaac Corporation.
When you have the information, it is time to cut some off your expenses temporarily and start paying off those credit card debts. If you have more than one credit card, work off the one with the highest interest rate first.
If your credit score is not that bad, make sure that you do not use your credit card almost to its limit because this too may affect your credit score even if you are able to pay the bill when it arrives. A good example is to stick only to 30% of the card limit. For those who may have a hard time keeping track of all this, it is best to put all your bills into a finance software program to monitor your expenses.
Sometimes your credit score is goes down because your lender has given you a lower limit when you know for a fact that it is much higher. To prevent this from happening, it is best to check this on a regular basis and if there is a mistake, this can easily be corrected by calling up your lender so this information can be corrected.
You should only have two credit cards so you are able to keep track when the due date is. For those who have more than two, it is best to pay them off and cancel the rest. When you only have two cards left, keep the oldest one since this is what credit bureaus look at as basis of your credit score. Keep in mind that you don’t have to use it regularly. The important thing is that it is still working.
We all make mistakes and sometimes we forget to pay our credit card bills on time. If this has only happened once, perhaps you can talk to your lender about it so he or she can remove this from your record. That way, your credit card score won’t be affected.
But if the amount isn’t that big and you refuse to pay for it because you feel that you charged unjustly, the collection agency won’t even bother to check it as this is no big deal.
The things that affect your credit score include charge off’s, collections and negatives that were not yours in the first place, late payments, low credit limits reported, accounts listed as paid as agreed, paid derogatory, paid charge off or settled, accounts listed as unpaid and lastly, negative items that have occurred over a seven period.
How to raise your credit score will not happen overnight so you have to pay your bills on time, check your credit limits and make sure previous loans have been settled. That way, there won’t be a problem when a lender conducts a background check on your credit history and your loan can be approved.