A good credit score is extremely important if you want to have a working relationship with financial institutions. Whether you are thinking of refinancing your home or buying a new one, you will need to have a good credit score to get really good rates. As long as you do not have some serious issues like foreclosures or bankruptcies knocking on the door, it is actually possible to improve the score quickly. Improving score quickly is difficult if you have some really serious debt problems. However, you can mend your ways immediately. In the long term, you will be able to have a good score that way. Below you will find a compilation of some of the most important ways to improve a credit score:
A bad credit history can cause scores of problems
Credit reports are documents that keep record of various loans and borrowings of a citizen or firm. All loans that a person or a company takes from a financial institution or some other company are recorded in the credit history. This history also contains information whether you pay these loans on time or not. Banks will give you a poor score if you have been delaying payments.
1. First of all check your score with all 3 bureaus. Ask for your annual free copy of credit report from all 3 bureaus. You cannot go about improving your credit rating without knowing your exact FICO score. Once you know these details, it is possible to work on a plan to raise your credit score.
2. Make sure you pay all your forthcoming bills on time. If there is a pending mortgage, try to pay it back as soon as possible. After mortgages, you can try to deal with different credit cards with high interest rates. Try to balance transfer these cards (at 0% interest rate) if possible. It will help you to deal with credits in an easy way.
3. Accept the fact that a bad score is a direct consequence of poor habits. Now you will need to pay more cash if some of your cards have reached the credit limit. You can use 1 or 2 your best cards more often. This way, you can achieve a higher utilization limit. It will help in improving your credit score from average to excellent.
4. Make sure that you do not cross credit limits of any of your cards again. Try to spend more with a card that has a higher credit limit. In order to improve your credit rating, you will need to keep the utilization low for each one of your credit cards.
5. Try to trim down credit card balances as much as you can. The credit utilization will be less when you clear out credit card balances which results in lower interest.
6. You are going to lose points from the most important FICO score on every occasion a credit card company or financial organization checks your score. Since your credit score is not very good right now, you shouldn’t apply for new loans or credit cards at the moment. Wait for at least 20-30 days. Also, you should be looking for ways to deal with your existing credit problems instead of applying for more credit cards.
7. You can get a secured credit card with some initial deposit. Generally the company will ask you to pay a few hundred dollars.
8. Dispute incorrect entries in your credit report.
With this information, you should be able to create a working plan for yourself. Always remember that responsible habits are very important to avoid such issues in the long run.