Life is hard when your credit score sucks, so Set’s Fix It
Whether it’s a foreclosure, a short sale, a deed-in-lieu, the loss of a job, or just plain irresponsibility, there are a few steps you can take to get your credit score back into the range it’s in. it is attractive to mortgage lenders and to you. you can finally buy that house.
Where does my credit score come from?
Credit scores range from 300 (worst) to 850. Although a score of 700 will give you lower rates and more credit opportunities than lower scores, 760 and above is considered excellent.
If you’ve ever ordered your credit report, you’ve done so through one or all of the credit reporting agencies commonly known as the “big three”: Experian, Trans-Union, and Equi-fax.
These agencies collect massive amounts of financial information obtained from companies from which Americans have obtained credit in the past. From this, they determine each person’s payment history, the length of the person’s credit history, the various types of credit they have, and the amount of credit debt they owe.
When the big three agencies turn over your information to Fair Isaac Corporation (FICO) or, in some cases, Vantage, you enter a complicated formula and you’re presented with a three-digit number that basically rules your financial life. Fortunately, your credit score adjusts based on how risky you seem.
pay on time
The best way to repair your credit score is by paying your bills on time, every month. Yes, it sounds simple and it’s the most responsible thing to do, but it’s also one of the fastest ways to get your score into a more acceptable range. Don’t you believe us? According to a study by Experian, 100 percent of super prime consumers and 97 percent of those with prime credit have no late payments on their credit reports.
Also, the Raleigh Area Development Authority says that someone with a credit score of 707 can increase it by 20 points, simply by paying bills on time for one month.
handle plastic
credit score
Your use of credit cards may be to blame when your score is at rock bottom.
First, credit rating agencies look at the age of your credit. New credit, like opening a new credit card or department store account, makes them wary. What will you do with all this newfound credit? Because they don’t know, you become a higher credit risk and receive a 10-point reduction to your score.
High balances also make it seem risky. If your cards are maxed out, you can lose up to 70 points on your credit score.
Don’t close your credit card accounts, just pay them on time. Consumers without credit cards or installment loans seem risky (it’s that fear of the unknown again) and tend to be penalized with lower scores. Plus, closed accounts still show up on your credit reports and can still affect your score.
If you have the money in your budget, another quick way to increase your score is to pay off high credit card balances. Try doubling your payments for a few months or at least pay a payment and a half.
If you build it, you can buy it.
Many Americans did nothing to deserve a low score other than never using credit. To credit rating agencies, these people are, again, unknown entities. How they will use the credit when they receive it is a mystery and therefore makes them a credit risk in the eyes of the bureaus.
Unlike people who need to cut back on their credit card use, you need to get a card, use it, and pay off your balance on time. Make sure you get a card from an institution that reports on your responsible use of credit.
To make things easier for you, we’ve compiled this handy checklist for fixing your credit:
– Request your credit reports from each of the big three bureaus to determine where you stand
– Dispute any errors you find on your credit report. Some shady credit counseling companies may suggest that you discuss everything on the reports, which can do more harm than good. The Federal Trade Commission offers advice on filing disputes on its website.
– Pay all your bills on time, every month
– Pay off your credit card balances. If you can only pay one at a time, pay the department store cards first if you have them, otherwise pay the one with the highest balance first. Try to get balances within 30 percent of your credit limit.
– Use old credit cards that you haven’t used recently to keep your histories active. Remember, old credit is worth more than new credit when it comes to your score.
– Get a secured credit card if you have no credit history. Use the card for small purchases and pay the balance on or before the due date.
– Consider getting a small loan if your credit report lacks a history of installment loans. Make sure the lender reports to all three agencies.
– Ask creditors to re-age your accounts. This can be challenging, but if just one creditor agrees to do it, your score can improve dramatically.
Ask the credit card companies to increase your credit limit