If you are looking to take out a loan or apply for a credit card, then it will be
very important for you to have a good
credit score, which is often referred to as your
FICO score. After all, the better your credit score, the more likely
you will be granted credit and the better the terms you are likely to be offered
for a loan or credit account. Even if you think your credit score is high
enough, there are likely to be ways you can make it even better.
If you are looking to take out a loan or apply for a credit card, then it will be
very important for you to have a good
credit score, which is often referred to as your
FICO score. After all, the better your credit score, the more likely
you will be granted credit and the better the terms you are likely to be offered
for a loan or credit account. Even if you think your credit score is high
enough, there are likely to be ways you can make it even better.
First things first, no matter how bad your
credit score really is, there is always something you can do on your own
to make it better, and you can make these changes on your own. There are a
lot of companies out there that offer help in this area, but anything legal they
offer to do for you, you can do yourself. Not only can you save yourself the
fees these companies will charge you, you can take personal control of your financial
destiny! Just keep in mind that it will take some time,
rebuilding your credit
rating is something that doesn't happen overnight.
The first thing you should do is assess the damage by looking at a current credit
report issued from one (or all) of the three major credit reporting agencies: Equifax,
TransUnion and Experian. Under the Fair and Accurate Credit Transactions Act,
every American has the legal right to receive one
free credit report from each one of the companies per year, which will save
you some money on processing fees. Check over your credit report with a fine-toothed
comb... if something seems incorrect or you are not sure of any items on your credit
report, then it is your right to contact the agency and ask for them to investigate
and verify any unusual items.
Pay special attention to any recent inquiries that you did not authorize.
Before a creditor approves you, or someone pretending to be you, for an account,
they will make an inquiry which will be noted on your credit report. If there
are inquiries that you did not authorize, notify the credit bureau immediately.
Checking your credit
report on a periodic basis, at least annually, is a good way to catch any
instances where you might be the target of
identity theft. By reviewing your
credit report periodically, you can lower the impact that any identity fraud may
have on your credit report and possibly catch it before it becomes a problem.
If you are concerned about others accessing your credit report without your permission,
you can freeze your credit report, which will limit who and under what circumstances
can access your credit report. If you think you are a victim of identity theft,
contact your local law enforcement authority immediately.
Once you know what you have to work with, make sure that all of your accounts are
current, and up to date. Forgot to pay the credit card bill last month?
Well, this will go on your
credit report and lower your credit rating. The longer and more often
you do not make bill payments on time, the lower your credit rating will become.
If you are having troubles paying some of your bills in a timely fashion, then maybe
debt consolidation
is right for you. The important thing to remember here is that keeping your
bills current, paying them on time, and doing this consistently will cause your
credit rating to rise over time.
Also, become aggressive with your payment plan. Pay bills off early if you
can, and make sure you do not miss any more payments. The longer you can do
this, the better your credit rating will become. If you have a credit card,
but you have paid it off, then keep the account open, but do not keep your credit
card: cut it up. By keeping your account open and in good standing, the credit card
company will report to the credit bureau that you have a good history with them,
which will increase your credit rating. Not only is paying your bills on time important,
but so are paying off your
debts.
The numbers of credit accounts you have open are also important to control. Credit
lending institutions will look at the total amount of credit room you have available
to you. If you have 10 credit card accounts, and you have $5,000 of credit room
available in each account, then that will amount to a total of $50,000 in potential
credit! Lenders will take a look at this potential debt load before considering
how much they will lend you. They count the full amount against you, as if you were
to go out and max all your cards tomorrow. If you are applying for a large loan
(perhaps for a car or house) these limits could work against you regardless if you
have a full limit or not. If you are heading to get a larger loan, pay off as many
of these as you can and close some of these accounts. A good idea would be to keep
three to four credit card accounts open, but only use one or two of them. Furthermore,
when you do use them, pay them off before you get a notice in the mail, and pay
them off in full.
When establishing these accounts, I recommend you turn over the extra credit card
to the owner of the account. There is no reason to be using this account and
you should respect the individual helping you out in this matter.
Remember, it will take some time before you can
rebuild your credit rating, but
it can be done. Paying off your
debts on time and keeping a small number of accounts open are some methods
to build a good credit history. The longer you do this, the better your credit rating
will become! It is up to you to take control of your financial destiny!