10 Tips To Improve Your Credit Score

I am in the process of purchasing a house and I can say that the process hasn’t exactly been an easy one, even though I am working with some awesome women to help me through this process. The first, and biggest, thing I had to do was get my credit under control. Here are 10 tips I have learned along the way about how to improve your credit score fast so that you can qualify to receive a home loan.

  1. Know Where You Are And Where You Need To Be – there are many services available for you to pull your credit score and report without hurting your credit score. Find out where your credit score is currently and where it needs to be. Then, make a plan to get there.
  2. Errors, Erroneous Accounts, Etc. – there may be errors on your credit reports, such as accounts that aren’t yours, accounts that show late payments when the payments were made on time, debts that you know you paid off but haven’t been reported to the credit agencies, etc. And, instead of contacting the credit agencies directly (unless you have several months to get things fixed), I recommend contacting the companies directly to re-report the correct information to the credit agencies.
  3. Pay Down Credit Cards – these are evil little pieces of plastic that eat up your money faster than you can make it (in most cases). Make a list of your credit cards, the balance, the credit limit, and the APR. You can either pay off the lowest balance first, or you can start with the card with the highest APR. If you pay down your credit cards substantially over a couple of months, you can boost your credit score significantly, and quickly.
  4. Do Not Close Accounts – When you cancel a credit card your credit score takes a hit. Once you pay down / off a credit card, specifically ask the credit company to report this to the credit agencies (they generally only report once a month).
  5. Closing Accounts – if you must close an account be sure to close the newest accounts first and leave the oldest accounts open. The longer you have had the account, the farther back your credit history goes.
  6. Credit Card Balances – if you have a couple of cards that are nearing being maxed out, but a couple that are open already, but have extremely low (or none) balances, then transfer some of the balance from the larger cards to the other cards. This will even out your credit card balances and usage and increase your credit score.
  7. Student Loans – I found out very quickly that my student loans showed a minimum payment that was way too high, and I had an ‘extra’ student loan balance showing on my credit report that was a duplicate. Instead of contacting the credit agencies to dispute these items, I simply contacted the student loan company and asked them to fix the situation. I received a letter from them stating that there was an error made on my credit report, what the error was, and that they have requested the credit agencies to fix the issue. I am able to turn that letter over to the lending company so that if it is not fixed timely (credit agencies don’t work very fast from what I have experienced), they can take that into consideration when looking at your credit report and score (and there’s no ‘disputes’ showing on the credit report, which is good).
  8. Pay On Time – if you have had late payments in the past, start paying all of your bills on time and don’t miss a single payment. This will improve your credit score.
  9. Do Not Apply For More Credit – while you might want to refinance your car, take out a small personal loan, or open a new credit card… don’t do it. Every time you apply for credit of any kind the company will pull your credit report and this will mean that your credit score will take a hit, whether or not you are approved.
  10. Bankruptcies – bankruptcies should only stay on your credit report for 10 years. If, after 10 years, it has not been removed, then send a letter to the credit agency(s) requesting that it be removed promptly. The same is true with debt that was included in your bankruptcy.

Have you recently increased your credit score? How did you do it?

How To Build Up Your Credit Score In The Midst Of Debt Relief

Debt does a lot of things to you and your finances. If you are not careful, you may find your life in complete disarray – your relationships, employment and even your credit score. All of these are in danger if you refuse to do anything about your debt problem.

But when you start working on your credit obligations, your credit score is not guaranteed to be any better. There are debt relief programs that will have a negative effect on your score once you use them. In truth, all programs will have an effect but some of them are worse than the others. Debt settlement and bankruptcy have the most negative effect on your score – the latter having the worst.

If you want to rebuild your credit score while you are in the midst of a debt relief program, you need to opt for debt consolidation. This type of debt solution will allow you to come up with a payment plan that will have a minimal effect of your score. This is true for both types of debt consolidation: debt consolidation loans and debt management.

Rebuilding your credit score even as you pay off your debts is a simple concept but it will require proper financial management skills. If you concentrate on developing the right habits, you will not only get out of debt, you will also have the capability and restraint to stay out of it.

To begin with, you need to stay true to your new payment scheme. Debt management is done with a debt counselor who will assist you in creating a DMP or debt management plan. This plan will stretch your debt payments so you can pay a lower monthly amount in a span of 5 year (usually it lasts this long).

When you opt for debt consolidation loans, you are usually on your own. You need to come up with a payment plan that will help you monitor your debt payments. Use the plan to ensure that you will no longer miss payments. The loan that you will take out will be considered a new credit that may dip your credit score slightly but as soon as you start making timely payments, it will steadily increase. Once you have paid off your other debts, concentrate on this one payment and show the proper behavior on paying your dues. This is one of the best ways to start a clean slate and increase your score.

As you work on your debts, you have to make the commitment to stop taking in more debts. In debt management, this is easier because you are not allowed to use all the credit card accounts that you enrolled in the program. In debt consolidation loans, this is more difficult to accomplish because you will be paying off your debts with the loan that you will get. That means all your credit cards will have a zero balance. If you are not careful, the temptation to use them may put you further into debt. You have to keep your cards to keep you from acquiring more credit. This is another way to build up your credit report since your total debt amount is a factor considered when computing for your credit score.

How to Dispute Errors on Your Credit

Disputing errors on your credit can be easier than you thought, it’s simply a matter of knowing what to do. Perhaps you went to buy a home and found out there were more dings on your credit than you thought. You may have asked your lender how to dispute errors on your credit. The lender may have suggested that it would be best to research the process through each of the credit bureaus websites to learn your rights as a consumer. It’s important to understand that when items are reported to the Experian, Equifax, and TransUnion, which contrary to popular belief are actually privately held billion dollar companies, not government agencies, the majority of reported items are not verified. This explains why approximately 80% of all credit reports have errors on them. This is why it is important to learn how to dispute errors on your credit.

Fortunately, you are able to leverage your rights under the Fair Credit Reporting Act(FCRA). These are rights most people don’t even know exist. The Fair Credit Reporting Act is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. These rights allow consumers to open an investigation or dispute any item on their credit reports. Take advantage of the FCRA when learning how to dispute errors on your credit. In order to open a dispute, the first step is to write letters disputing the errors on your credit report. You can open a dispute online or by phone. Your dispute letters should be worded correctly so that you get the attention of the credit bureaus. Keep in mind that if you do not get a response from each credit bureau within 30 days from them receiving it, the items are automatically deleted if the credit bureaus did not take time to investigate the dispute.

When discovering how to dispute errors on your credit, remember that you can use the Fair Credit Reporting Act in your favor. Stating this within your dispute letters will give you the quickest response from the credit bureaus. In your letters, include that you are familiar with the section of the Fair Credit Reporting Act of which they are in violation. Keep in mind that you are not limited to disputing only one error at a time. You can be efficient and aggressive by disputing all errors at once. There is a great deal of information online about writing the best possible letters and recommended formats. You can write the letters yourself or you may choose to hire a creditable, proven credit restoration company to assist you in the process. You want to do your due diligence and ensure that the company knows specifically how to dispute errors on your credit.

4 Tips to Credit Card Usage

While some people prefer buying on cash, there are advantages also to buying things on credit. Owning a credit card is a privilege and a responsibility and happy are those who know the art and science of managing it well. This article offers some tips to safeguard your credit standing and how to maintain a good business relations with your bank or credit card provider.

Just to show you that you can use a credit card to your advantage, let me tell you about my friend who owns a travel agency. Because of his good standing, he was able to secure a credit limit equal to flying a family of 5 to 10 members to overseas countries. He managed it well, paid well, earned the credibility and trust of his credit card provider, enabling him to have a high credit limit which he now uses to finance his business activities and operations.

Enroll in online banking

This is a good thing to do so as to readily see your transactions and credit card balance at any time you like. Aside from this, you can record expenditures in excel or word document or a notebook for there are times that a bank’s website has to do maintenance or is down for some time. There was a time that I could not login to my online account for days due to the site’s problem and I paid an over credit limit fee for not being able to know the updates of my expenditures. I tried asking for a reversal but it was not approved.

Always pay on time

Keep in mind your due date and pay on time. If possible pay in full to refrain from being charged by the bank. In spending, stay within your bounds or paying power. If you are able to pay 300 USD per month, then try to limit your spending within or less that amount. Wait till the cut off period before buying things on credit again.

Use of other payment channels

If you intend to pay on other channels or banking institutions other than your bank, pay 2-3 days ahead of the due date to have allowance for delayed posting. While your primary bank will post the payment on real-time, this is not the case with second or third party channels.

Decide on your card type

With the many services and consumer goods we have, some banks have come up with different credit cards also. There is the visa, master card, platinum, gold etc. and there are cards specialized for health care, travel or groceries only. Decide which card type is best for you depending on your needs. Credit cards have different membership fees too but the first year usually is free of charge.

To avoid from paying charges, read on the rules or terms of agreement. The more you know, the better you will be able to handle your finances.