Improve Your Credit Score
Do you know how to improve your credit score? Banks and financial institutions use your score usually to assess how creditworthy you are and how much interest to charge you.
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Other institutions now also rely on this information. Insurance companies, prospective employers, and even your landlord now refer to your credit scores to determine how much to charge you, or even if they'll do business with you at all.
If you want to improve your credit score, you need to know that there are a number of ways your score is calculated. The FICO score was created by Fair Isaac, a company that specializes in providing risk management and credit scoring data analysis. It is the most commonly used system.
A fairly new system, called the Vantage score, was developed by three credit reporting bureaus. The procedure by which your score is determined differs between these two systems, but the concepts are fundamentally the same.
With such great importance attached to it, it's fairly obvious that you need to take very good care of your financial information. But what do you need to do to improve your credit score?
Since football season is now under way, let's break it down, quarter by quarter.
First Quarter - Pace Yourself
1. Be on time with your loan payments.
2. If you do slip behind on some of the payments, you need to catch up with all past due accounts. This is probably the toughest part, but it's extremely important. One of the important components of calculating your FICO score is the ratio of the total amount of dollars you've borrowed over the amount of dollars in credit you have available.
3. Use only up to 35 percent of your credit limit. For example, if you have a credit card with a credit limit of ten thousand dollars, you need to make sure your balance owed is no greater than 3,500 dollars. And you'll need to do this two to three months before you go into a loan transaction.
Second Quarter - Go For 2
4. Don't throw away old credit cards. As explained previously, your credit score is determined in large part by the amount of credit available to you. If you've started getting rid of your old accounts, then at least keep a few of them active.
5. Maintain a healthy mix of installment, revolving and new accounts. Installment accounts include property mortgages and car loans. Your credit cards are examples of your revolving account. New accounts are loan or credit accounts opened within the last year.
6. Confirm that your credit card limits are being accurately reported to the relevant credit bureaus. If your limits aren't being reported, and your balances are high, it will appear as if you're maxed out and this will affect your score.
Third Quarter - Credit Bureaus Are Your Linemen
7. Make sure your "good" credit is being reported accurately to all the credit bureaus.
8. Make sure your home equity line of credit (HELOC) is being reported to the credit bureaus as a mortgage or an installment account. Credit bureaus may automatically report home equity line of credit as revolving debt and so this falls under the same rule as credit cards. If this is the case you'll need to write a formal letter to the credit bureau asking them to change the rating on the account.
9. If you have had a bankruptcy reported in your credit rating, make sure that the items declared in the bankruptcy are reported with a zero balance. Doing this can earn you extra points on your credit score.
Fourth Quarter - Don't Let Up
10. If you spot any inaccuracies in your credit record you need to get these corrected quickly. Prepare a letter requesting for the correction to be made then send it along with any documentary evidence via overnight certified delivery to the credit bureau reporting the inaccurate information. This is the fastest way to get a response.
11. If you do not need to enclose any documentary evidence, you can go visit the website of the credit bureau concerned and file your dispute online.
12. If your parents or relatives have good credit, you can ask to "piggy-back" off their credit rating. Just have them add you as an extra user on their credit card account. Your score will instantly get a boost from this. Take extra care with this action, though. Many people have abused this loophole and credit companies are beginning to crack down.
Improve Your Credit Score - Ounce by Ounce Equals Yard by Yard
There's a saying about an ounce of prevention being better than a pound of cure, and the same goes for improving your credit score. If you don't want to go through all the trouble and stress of repairing and improving your credit score in the first place, then take good care of it and don't fall into any of the traps that will damage your credit rating.
Improve Your Credit Score In 12 Steps 12 OUNCES EQUALS
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