Millions of consumers across the U.S. contend with the effects of having a poor credit rating. Some are turned down for credit cards or vehicle loans, others learn their applications for a new home loan have been rejected. If you are dealing with the limitations that get imposed on people with poor credit, you may already know your credit reports are in need of repair. These days, understanding how to repair your credit score doesn’t have to be frustrating or stressful, thanks the wealth of credit resources available to consumers.
Tips to Improve Your Credit Score
Credit scores are a tool used by lenders to determine the probability that a borrower will repay his or her loan. Fortunately for those with lower credit scores, this rating is not set in stone. It can take time, but there are many ways you can increase your credit score.
* Pay your bills on time – Your payment history makes up 35 percent of your credit score. A period of not making timely payments can cause your score to drop but since the impact of a late payment wanes over time, concentrating on making all payments on time from now on will get your score moving in the right direction.
* Get current on missed payments – If payments are already past due, their effect on your credit rating will become increasingly more devastating the more time they remain outstanding. A few 30 day lates are excusable, but a single 90 day late payment can cause your score to plummet.
* Try to maintain low balances on your credit cards – Outstanding debt makes up 30 percent of your credit score. The closer you are to maxing out credit cards, the less stable your finances look to be. Keeping credit card balances below 30 percent of the available limit will make your utilization ratio look better.
* Avoid shifting your debt on credit cards – Transferring debts to a low interest rate card is a solid strategy when working to whittle down debt, but constantly transferring balances between credit cards makes it look like you are robbing Peter to pay Paul instead of being able to make your monthly payments.
* Carefully study credit applications before accepting – Some loans, including department store cards, are loaded with strings attached that can end up resulting in big problems down the road. For example, some no payment, no interest financing programs offered by retailers include rates that can skyrocket if you are late on a single payment and clauses where you may still be responsible for interest accrued during the “no interest” period.
* Use your credit cards responsibly – Keeping balances below 30 percent is a start, but you should also be careful to keep the number of cards you have in check, make all payments on time, occasionally use older cards, etc. For the most part, best practices for all credit accounts apply to credit cards but given the tendency people have to let their credit card spending get out of control, and how eager credit card companies seem to be to jack up interest rates or adjust limits, responsibly using credit cards warrants special mention.
Lastly, for people who need additional assistance addressing their bad credit, another excellent resource for consumers are professional credit repair services. Professionals can provide their valuable expertise on important matters like disputing the questionable negative items on your credit report and specific steps you can take to make the most of your credit score.
More information about credit and steps people can take to repair bad credit can be found by visiting Lexington Law’s Credit Education resources. More information about Lexington Law can be found at www.LexingtonLaw.com
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