Taking action is the only way you can raise credit scores and sometimes the actions are really simple. Consumers with credit scores ranging from 720 to 850 are prime candidates to qualify for the lowest interest rates.
You know raising your credit score will improve your financial outlook but taking action can be a challenge. While the thought of confronting your credit history may be overwhelming, taking action is the only way to improve your credit scores. And, in reality it may only take a few steps to raise your credit scores.
Fixing your credit history calls for knowing what may be affecting your credit. There is no excuse for not checking your credit report because you can get it for free weekly online through April 2021 due to COVID-19 at www.annualcreditreport.com.
Get your credit score to know where you stand in the eyes of banks, lenders and credit card issuers. Unfortunately credit scores are not free but you can order your true FICO scores at myfico.com.
Here are 5 incredibly simple actions to take that can raise your credit scores.
1. Fix Current Negative Information.
When you discover inaccurate or negative information in your credit reports notify and dispute the credit bureaus first; and if that does not work, dispute directly with the furnisher of the information. Develop a plan to deal with negative information in order to minimize the damage and never ignore negative information unless it is older. In the case of older negative information, it is not significantly affecting your credit score.
2. Collection Accounts.
If you have the money consider using the “Pay for Delete” strategy to remove current collection accounts. Once a collection account gets to 48 months or older it does not factor into the credit scoring system. Not all collection agencies will agree to a pay for delete but it’s still worth asking. You want the collection account deleted from your reports because even when it has a “paid status” it remains as a negative account simply because it is a collection account.
3. Reduce amounts owed on credit cards.
Amounts owed contributes 30% to your credit score’s calculation. This category can be the easiest way to raise your credit scores fast. The closer you are to your credit limits the lower your credit scores. There’s no getting around this area of your credit history unless you either pay down your credit card balance or request a credit limit increase.
For the best credit scores reduce your credit card balances to 10% of your available credit limit. For example: If the a credit card limit is $5,000 reduce the balance to $500. What’s good about reducing your balances is that it works no matter what your credit limit. Meaning even if you have a credit account that only has a limit of $300, as long as you keep your balance within 10% of your available credit limit, your scores will improve.
4. Make multiple payments.
Another way to reduce credit card balances is to make multiple payments throughout the month. Increasing the amounts of your monthly payments until all balances are below 10% of your credit limits will improve your credit scores.
Creditors typically report the balance on your loan or credit card on a particular day each month. But if you wait until your due date to make a payment, the balance may not accurately reflect your payment, which means you will appear to carry more debt than you really do. Make small multiple payments each month, rather than one big payment at month’s end.
Once the payments show up on your credit reports in the form of a lower monthly balance, then the new balance will factor into the next calculation of your credit scores.
5. Get a credit card.
Consumers needing to improve credit scores should have something the credit bureaus can use, besides negative information, to calculate a credit score. You may need to get a credit card to rebuild or improve your credit. One way to do this is to get a secured credit card or an unsecured credit card that does not require you to have good credit.