How to Improve Credit Score

Shopping for a new loan or auto loan and wondering why the interest rate you were offered was so high? Guess what, the interest rates you will be charged depends greatly on your credit score. So, how to improve credit score?

Before you start shopping for a new loan, you should find out what's on your credit report and see if there are any negative items or errors on it and how it affects your score.

Make sure to get your report from all 3 credit bureaus; that is, Experian, Equifax and TransUnion. Cautiously go thru the reports and exam the info on the reports to decide what actions to take to improve your scores in the shortest amount of time before you apply for a new loan.

You need to dispute any errors or negative items found in the reports as soon as possible, as they can lower your scores and affect your ability to apply for loans. You should dispute items such as late payments, charge-offs and "paid as agreed", collections not yours or old items that already passed the time staying on the report and they should have been removed. All info needs to be current.

For any item that is legally verified and paid off, you should ask it to be shown as "paid in full as agreed". By doing so, it will help you improve your score.

In addition to the above steps, you also want to check all credit limits on your reports and be sure the correct amounts being reported and the last activity date is correct.

Another quick and easy way to raise your score is to pay down your balance. The lower your debt to credit limit ratio, the higher your scores will be. Try to keep the ratio below 50%.

One more thing you need to be aware of while in the process of improving credit score is not to close any of your accounts, especially the older accounts. The older accounts show your credit worthiness, and credit history. If closed, it will definitely reduce your scores.

Source by Hope Lin

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