The largest determining factor that creditors consider when evaluating your application is your credit score. This 3 digit number is very important as it impacts the output of your auto or home loan. A good credit score will give you the privilege to avail of lower interest rates, and that means more savings and reduced debts. If you have a poor credit score, you will less likely qualify for the lowest rates available in the market. So you will need these steps to boost those digits faster.
1. Put Your Credit Report Right on Track.
If there are errors on your credit report, fix them first. Do this by asking a free copy of your credit report from the 3 major credit bureaus; Equifax, Experian, and Trans-Union. These are the three big agencies that generally collect and maintain individual credit information from banks and other businesses. Your credit report has subtle details that are used to determine your credit score. If erroneous data are included in your report such as incorrect lists of late payments, your score will be significantly dropped down.
2. Contest the error in your credit report card.
Contest the errors that you find in your report by writing to the credit bureau or the credit who registered the wrong information. The Fair Credit Reporting Act (FCRA) gives consumers the right to dispute a credit report. In a debt dispute, the credit bureau is required by law to do a thorough investigation to correct the verified errors. Inaccuracies can greatly affect your credit score. An incorrectly reported late payment for instance, this can lower your score by as much as 60-110 points.
3. Avoid postponing your payment; pay your bills promptly instead.
Taking your payments for granted will take a toll on your score. If you have been struggling with this, set up your account for automatic payment. In that way you can be sure that your payables are paid on time. Help yourself by choosing a date of payment that is easy for you to remember (like every last Monday of the month). Better yet, mark your calendars or organizers to be sure you do not forget. When your bills are past due, pay them immediately. Never let your account reach the debt collection agency. Otherwise the date will show in your credit report and will stay in your report for as much as seven years!
4. Reduce your debt balance.
The most efficient way to increase your credit score is to bring your overall debt balance down. In fact, this strategy is far more rewarding. Avoid a new card application as much as possible. A new credit card account can lower your average credit line which will greatly injure your score. When purchasing goods or services, pay in cash and refrain from using your credit cards. And if circumstances demand and you need quick cash, borrow money from a friend or family. Technically, the idea will not minimize your debt in any way, but transactions like this will not be reflected in your credit report. Your credit score therefore will not be affected.
We all make bad financial decisions at some point. However we do not need to linger to those mistakes. Let these steps help you boost a good credit score.