Raising Your Credit Score

Don't Pay Someone Else Thousands, Do It Yourself!

The  first thing that you need to do in order to increase your credit score is to order your free annual credit report, in order to find out what your credit score is.  Once you have obtained copies of your credit reports from all three credit reporting agencies:  Experian, Equifax, and TransUnion, you must go over those reports to check for any errors or inconsistencies.

It is vital that you correct any mistakes or inconsistencies as soon as you can.  This is the most pro-active step you can take for yourself to increase your credit score as mistakes can and do happen, and you could find yourself penalized unnecessarily.

Look for accounts that were previously causing a problem but  have since been paid off.  Find any accounts that were closed or any accounts that don't belong to you.  Then, take steps to correct those errors by contacting the credit bureaus and beginning the process of having these errors removed from the report. This needs to be done in writing, but is well worth it because this alone can increase your credit score.

Checking your credit report often can also indicate if you have become a victim of identity theft, which is something that is happening with frightening frequency.  It affects millions of people and can wreak havoc with your credit rating.

Correcting the problem of identity theft is a process that will take quite some time, but it can be done with patience and your own excellent documentation.  You should definitely be contacting the FTC and filing a police report in this situation in order to preserve your credibility.

In the above section, we discussed extensively the option of filing for bankruptcy.  This should be done only as a last resort and if you are in a really bad financial state that cannot be solved.

Filing for bankruptcy doesn’t have as bad a stigma attached to it as it did historically.   While it’s true that the bankruptcy will remain on your credit report for up to ten years, lenders know that you will not be able to file for bankruptcy again within that time frame, so you may actually be able to obtain credit regardless of a bankruptcy.

Before you resort to a bankruptcy filing, you should first try getting the advice of a credit counselor to help get you back on track.   Find a reputable company that provides results and know that you will be paying a small fee for their service, but one that will probably pay for itself in the long run.

Check Out The "Credit Secrets Bible"

Credit counseling companies  not only work with your creditors to secure lower repayment rates, but they provide financial planning advice for you to use in the future so you do not repeat the situation.

If you do have steady income, you may want to look into a debt consolidation loan.  That way you can pay off your creditors and make one monthly payment to one company instead of several monthly payments to several companies.

There are also companies who can help with debt consolidation loans although you can certainly do it on your own.  They can, however, secure loans for you with a lower interest rate and they can also shop around to different companies to find you the best debt consolidation loan to help you get out of debt.

If you have bad credit, expect to take about a year or two to increase your credit rating.  How do you do this?  Let’s review:

• Pay your bills on time.  This alone will show good faith to your creditors and have a positive effect on your credit rating

• Don’t use credit at all if possible.  That means cutting up your credit cards and paying cash for the things you need.

• You may want to keep one credit card that you can use for emergencies – but remember that it is for emergencies only.  Keep the oldest card you have as that shows you are not  applying for new credit.

• A good idea for not using that one credit card is to freeze it in a block of ice.  It won’t damage the card and it will require thawing before you can use it.  That way, you will have to wait before making a purchase thus eliminating the lure of an impulse purchase.

• Don’t apply for new lines of credit at all.  The only time you should ever be applying for credit when you are in a financial pickle is if you need to make a big purchase such as a vehicle or home.

• Monitor your credit report faithfully and immediately correct any mistakes that you find.

• If you find that you cannot make a payment on time, call your creditor and explain the circumstances.  If you have been a good customer, they may be willing to accept a late payment and waive the late fees.  Of course doing this too often will reflect poorly on your payment history.

• If you have little to no credit, you can establish credit by obtaining a department store or gas credit card.  Then you make a few purchases and pay the balance off immediately.

• Be very careful when making purchases online.  Make sure that when you are entering in your credit card number it is done on a web site that starts with https://.  The “s” at the end of the http designation shows that it is a secure website that will keep your information private.

• Beware of “phishing” e-mails that direct you to a separate site where you are asked to provide personal information.  This is how many identity thieves obtain your bank account or credit card numbers and they can run up horrendous bills in a very short period of time.

• If you want to obtain a large loan, say  for a vehicle, you may want to try and get a co-signer who has good credit.  Their good name and credit history can help you get the loan and build your credit at the same time.

• Again, we want to impress that the most important thing about maintaining good credit and raising your credit score is:  MAKE YOUR PAYMENTS ON TIME!  And use credit sparingly.

There are a lot of great tools available online to help you with credit and making credit decisions.  Go to www.myfico.com and check out some of their calculators.  Since FICO is the company who assigns you that magic little number that is your credit score, they are a great source of help for the consumer.  At this site, you can find out:

• Which loan is better

• How much your mortgage payments are likely to be

• How much money you can afford to borrow

• Whether or not you are better off refinancing a loan

• How much refinancing will cost you

• Whether or not you should consolidate your credit cards

• How long it will take to pay off a credit card balance

• How rate changes will affect your loan balance

• And much, much more!

You can also find many other websites that can help guide you through not only the credit process but how to get and maintain a solid credit score and rating.

Last, but not least, don’t forget the three major credit card reporting agencies.  These are the places you should start to obtain your credit report and get on your way toward better credit. 

• Experian:  www.experian.com

• TransUnion:  www.transunion.com

• Equifax:  www.equifax.com

Plus, you can also go to the following websites to obtain your annual free credit report that is available once a year to all consumers: 

• www.annualcreditreport.com

• www.freecreditreport.com