We've previously discussed how many credit reports contain errors and what impact it has on your credit score. Since your credit score determines stuff like getting good rates on home and auto loans, credit cards, insurance and even employment its important to check your credit report frequently. Here are some tips to help boost your score:
Read your credit report very carefully. Identify anything that isn't yours. Especially negatives items like late payments, charge-offs and collections. If you do have legitimate collections, make sure they aren't being reported twice. Sometimes when accounts go to collection the original creditor will list it as a debt as well as the collection agency. Any duplicates must be deleted.
Negotiate bad debts with the creditor and have them deleted. If you have a collection or charge off that's been out there a while the creditor is likely to settle for a lessor amount and quite possibly delete it from your credit report. Be sure and get something in writing from them stating that they will "delete it" upon receipt of settlement. If you are in the process of buying a home at the time of negotiating a debt, DO NOT TELL THE CREDITOR. They will be less likely to settle for less than what you owe.
Make sure that all of your revolving accounts never carry a balance more than 30% of the available credit. If you have a card with a $ 10,000 limit make sure that the outstanding balance doesn't float more than $ 3000 for any 30 day period. This tells the world that you aren't overextended and are in control of your finances. If you've maxed a card out already see if the creditor will up your limit. Do not use this extra cushion or you will soon be maxed out again!
Do not close old credit card accounts because these accounts show your established credit history. Keep these accounts open as they tell a story about your stability and pay habits.
If you do not have credit cards and at least one active installment account open some immediately. Go for secured cards if you've been turned down for traditional credit cards. The scoring system likes to see three open credit card accounts. Secured cards are an excellent way to establish credit. Typically you make a deposit that is equal to the credit limit. This ensures the bank that you will repay the card each month. Installment loans are things like car loans, appliances and furniture. Getting a mortgage is the ultimate installment loan that will surely boost your credit rating with timely payments.
It takes time to build up a good credit score. Be patient and follow these tips. Remember to check your credit report and credit scores quarterly. These soft credit pulls will not affect your score. Soon you will be on your way to saving sweet moolah through lower interest rates because of your excellent credit score.