In the coming year, millions of Americans are going to be making new resolutions to increase their credit scores. This may well be the best year to take the first steps toward credit improvement – without attempting to apply for a loan.
The most important component of any credit report is the amount of debt you have, it makes sense that you want to do everything you can to keep your debt to a minimum. You’ll need to keep your credit report clean and error-free. The three biggest mistakes made when it comes to paying off credit cards are missing payments, charging the wrong amount, and using a
secured card without a good reason.
If you don’t pay your credit card balances off on time, creditors can and will raise your rate. This can lead to serious financial trouble as late fees and penalties begin to mount.
It’s also worth noting that not paying your bills on time will hurt your credit score. By the time you’ve reached the point where you can take out a loan, your credit score will likely be low enough to warrant some form of adverse credit rating, such as a low FICO score.
Credit scores are calculated using several factors. The following are common ones:
Your credit report contains all sorts of information about you, including your income, debt, credit history, and any types of bankruptcies that might be present. Even if you’ve never filed for bankruptcy, these records will show up, so it’s important to make sure you stay current with your credit reports.
Every six months, your credit report will receive some updates, and it’s a good idea to make sure you read them. Many errors will be corrected automatically by the credit bureaus, but you can always dispute them. And if the error is something that could have been prevented in the first place, it could result in a partial credit boost for you. If there’s a mistake in your report, you can fix it yourself or contact the reporting agency.
Credit bureaus can and will occasionally charge you a small fee to correct mistakes on your credit reports and to verify things like your Social Security number and date of birth. Once the process has begun, it takes about sixty days to have your report completely reviewed and to verify the information. If you’re paying a debt that’s overdue, the process will probably begin almost immediately. You may even notice a partial credit boost within a few weeks if you follow the steps outlined here to avoid the most common errors.
If you use your credit cards frequently, such as if you have many accounts at one store or if you’ve been turned down before because you had insufficient funds in your account, it can hurt your score. In this case, it may even be best to keep your card for emergencies only, but be sure
to pay your balance off each month.
When it comes to getting a credit boost, debt consolidation can be a great way to start. Most consolidators will lower your interest rates, eliminate or reduce annual fees, and even eliminate the credit limit on your cards so that you’ll only have one payment. instead of numerous.
But before you apply for a new credit card or open one, it’s important that you investigate the company that offers you one. to make sure that they are a reputable lender who makes their money on interest and not through the commission you’ll be receiving each time you make a new purchase. If you find that they’re shady, avoid those companies at all costs.