Improve Your Finances And Increase Your Credit Score

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The current economy has caused millions of people to struggle with bad credit. However, there are some valuable steps that you can take to improve your credit report, increase your credit scores and get back in a good financial place.

If you look at your credit report you will see a history of how you have handled your finances in the past and how you are currently handling your finances. It shows how much you owe and how punctual you are in paying your debts. It also shows how much debt you have accrued compared to how much credit you have available. You can get a free copy of your current credit report from each of the three main credit-reporting agencies one time each year.

Your credit score takes into account all of the information on your report and compiles it into a numerical representation of your predicted creditworthiness. This is based upon your past history, the important debt to available credit ratio and your current debt load. Right now you must pay a fee in order to get your official FICO credit score.

Prior to embarking on any type of credit repair it is crucial to make sure you are secure in your income and finances. Your income should be steady enough and sufficient enough to cover all of your debts and expenses with some free money to spare. If your income and budget has not fully recovered from your past problems, all of your credit repair efforts will be in vain.

If your finances are back in order and you are comfortable with your budget you can start the process of credit repair. First off, you need to get your free copy of your credit report from each of the three main credit-reporting bureaus. In the United States, the main credit-reporting bureaus are Experian, Equifax and TransUnion. You need all three reports because they are all different and you will need to fix all of them. It is possible to get just one tri-merged report with all three in one report for a small fee.

When you have your reports you will need to verify and check them all very thoroughly. You need to also be aware that most credit reports contain errors, in fact it is estimated that as many as 79% of all credit reports contain errors. Prepare your disputes for any errors as soon as you can because it takes time and expertise to get them removed and any errors could be significantly bringing down your score.

You need to also address your current debts. You will be able to significantly raise your credit score if you pay down any current debt to below 20% of the available balance. This factor is referred to as the debt to available credit ratio and it accounts for a substantial percentage of your credit score. Never cancel credit cards or lines of credit on your own because this debt to credit available ratio will suffer for it and your credit scores will go down.

Establishing new credit can also be important when you are repairing your credit. If you are unable to qualify for a regular credit card of line of credit, look at the option of getting a secured credit card. Within about 6 months of taking action on credit repair you will likely be able to see some significant improvements.

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