Whether or not you have faced financial problems, the truth is that you should know how to improve your credit score. Unless your credit score is at the perfect score of 850, then there is always room for improvement.
The majority of Americans do not understand that there are several proactive ways to improve your credit score. Clearly, you can’t sit back and hope for your credit score to improve without taking any actions to acquire credit and demonstrate credit worthiness. Even if you currently have bad credit, or you have recently filed for bankruptcy, with a little bit of time and patience it is possible to raise your credit score.
The first thing that you need to be aware of is your rights and what exactly your credit report states. Typically there are several incorrect items on a credit report that can be corrected and cleared up. Because everyone is entitled to one free copy of their credit report per year, the first things you should do is make a request for your report from the three major credit bureaus. The three major credit reporting agencies are TransUnion, Equifax, and Experian.
Take Advantage of Free Credit Reports
A little trick to getting your credit report throughout the year is to make a request to each credit agency every 4 months, rather than simply obtaining all three of them at once. By doing this you can have a fresh report throughout the year to monitor your progress in improving your credit score.
Submit Disputes for Negative Items
The most effective way to raise your credit score is to get rid of the negative items on your credit report. You are entitled to dispute every negative item, even if you know the item to be based on fact. Once you have disputed an item, the credit bureau must either verify the validity of that item with a reasonable time or remove it from your credit report. The time period for a credit bureau to verify an item is usually between 30 and 45 days from the date you submit your dispute. Once you submit a dispute the credit bureau must contact the creditor that placed the negative item and get it verified by them.
In some cases if someone is lazy, does not take the time to respond to the credit bureau, or if they make clerical errors, you are entitled to request that the item be stricken from your credit report. This legal technique is the most powerful and effective method to improve a credit score. 40% of the items that are disputed do not get verified and are therefore able to be stricken all together.
Strategically Plan the Time of Your Dispute
Remember to choose the busiest business times of the year to file your disputes. You want for them to not get verified! Always send in your dispute forms via certified mail and request receipts. Keep meticulous records and you are on your way to raising your bad credit score already!
Two Tips to Improve Your Credit Worthiness
Nothing speaks louder to your credit worthiness than demonstrating that you are responsible and able to repay any money you may wish to loan. The most important thing you should do is to make every payment that you are responsible for on time and every time. Late and missed payments are the single largest contributors to the development of a bad credit score.
If you utilize credit cards, be sure to keep them at roughly 30% of their maximum limit and pay them off in full every month. The second most important variable in the credit score algorithm is the “credit to debt ratio”, or the gap between your maximum credit card limit(s) and the amount that is actually being utilized on the card. If you charge them up and then just pay the interest charges, it looks very bad.
These are some simple, yet very powerful techniques to improve your credit score. Now you simply need to be patient, diligent and responsible in your credit management. Before too long you will begin to see negative items dropping off your credit, and your credit score will begin to improve.