Knowing your credit score is probably the most basic fundamental of credit repair. It is more important to know what affects your credit score. Knowing how to proceed to improve your credit score is even more important.
Source of article: Know your credit score, and take steps to raise the number by Personal Money Store
It is free to get your credit score
Due to a financial reform, helping your credit score is easier. Free credit report services are all over the internet. Now these credit reports have to also include your credit score. Paying for that was extra. But part of the lately passed financial reform bill makes sure that you are able to get a free credit report that contains your credit score once per year.
Why is your credit score so low?
When it comes to credit repair, a lot of people do not know how they affect their credit score. For example, according to Wallet Pop, many individuals assume if they pay their bills on time, their credit score is good. Even if you always pay on time, when your credit cards are maxed out, your score is lower than it should be. When credit bureaus see borrowing to the limit, they see risky behavior. Tackling excess credit card debt is your first priority when improving credit scores.
When repairing credit, pay down credit cards first
You’ve to pay back credit card debt first to raise your credit score. There are two types of debt. Installment debt is secured by many collateral, like a car loan. Revolving debt involves credit card balances. For some people, credit card debt revolves forever, which is not good for the credit score. Since credit card balances seem to be unsecured, credit report companies like FICO say they’re more risky than installment loan. Paying down credit cards is going to do more to raise your score than paying off your cars.
Pay off last college agencies
Unfortunately, if you’ve been taken to collections, your credit score is already hurt. Paying the collection agency won’t change the numbers. According to Bankrate.com, by the time your debt goes to collection, your creditor has already written you off. Although paying the collection agency will end the harassment, it won’t erase the delinquency from your credit report. Bear in mind a surprise call from the collection agency can result from missed payments on every little thing from utility bills to library fines. The key to protecting your credit score is to avoid collection within the first place.
To charge cards, say no thank you
To keep your credit score from dropping quite a bit, keep refusing that charge card each department store tries to sell you. This is because opening and closing credit accounts can lower your credit score. According to Wallet Pop, FICO credit bureau research has found that opening any type of credit account is automatically seen as more credit risk. If you do get that charge card and then you pay it off in full, your credit score will rebound in a couple of months, but it won’t rise above the level it was before you bought that new outfit.
Do not cancel any credit cards
Sometimes when it comes to credit repair, it looks like the deck is stacked against you. Especially when it lowers your score to cancel credit. When canceled, the line of credit with credit cards goes away. Your credit goes down with less credit accessible. Instead, you are able to just zero the card and throw it inside your dresser. New credit card rules prohibit all of the credit card companies from canceling cards you don’t use–which used to hurt your credit score–so you don’t have to worry about that anymore.
Use payday installment loans wisely
Taking out an installment loan for credit repair is risky, but it can work to pay down credit card debt with personal discipline. For those who have a variety of maxed out credit cards, the new installment loan won’t negatively impact your credit score too badly. For this strategy to lower your credit score, you have to make yourself pay off the credit card debt with the payday installment loans, and throw the credit cards in the drawer until the installment loans is paid off.
Find more details here:
Wallet Pop
walletpop.com/blog/2010/07/07/good-credit-score-secrets/
Bankrate.com
bankrate.com/finance/debt/3-easy-ways-to-rebuild-your-credit.aspx
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