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Old 04-02-2004, 07:52 PM
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Default Steps To Increase Your Credit Score

They come everyday, one after another, filling your email box with claims of quick and easy credit repair. These emails are simply preying on people's desire for a quick fix to a major problem. With some 30 million Americans having less than stellar credit report ratings, there are plenty of people looking for a quick fix. There is, however, no quick and easy legal way to change a credit report if it is accurate. Although no quick fix exists to repair your credit rating, there are a number of ways that you can move it along in the right direction. Simply understanding a little more about how the credit rating system works will put you in a better position to improve your score.

First, you need to know what a credit rating is. You are given a score between 300 and 850 depending on a number of factors taken into account by the credit rating agencies. These numbers are used more and more by lenders (mortgage, car loan, credit card) when evaluating your credit worthiness, as well as employers, landlords, insurers and others who use it in evaluating applications. Knowing how the scores are determined will be useful to those with credit ratings that are considered sub-prime (560 points or lower which include consumers with little or no credit history, consumers who have filed bankruptcy within the past 10 years, those who have a terrible track record over the past seven years of paying their bills on-time, or consumers currently carrying far too much debt for their income level), but also for those who have good ratings that want to make them even better.

The first step is to get hold of your current credit reports. The Federal Trade Commission (FTC) has set up a new website annualcreditreport.com where you can now get a copy of your credit report free of charge from all three of the credit report agencies (Equifax, TransUnion and Experian) each year. It should be noted that the credit reports must be ordered from the FTC site to get them for free. If you order your credit report directly from the credit report agencies' sites, you'll be charged a fee for the report.

This free credit report is being phased in over time and is currently only available to those who live in states on the west coast of the US. For a time table on when these free credit reports will be available in other areas of the US, you can click here. The one point to note is this will give you your credit report to check for inaccuracies, but it will not give you your credit score.

If you live in a state where the credit reports are not yet available for free, here, you can get a free credit report directly from the credit reporting agencies if you've been denied credit in the past 60 days, are unemployed, on welfare assistance or believe your credit record contains inaccurate information due to fraud.

If you neither of these free credit reports are available to you at the moment, you can also receive your credit report for a small fee at any time from the credit reporting agencies. Their contact information is:

Trans Union (800-916-8800)
Equifax (800-685-1111)
Experian (888-397-3742)

Don't assume that each agencies report contains the same information. These agencies get their information from lenders and different lenders report to different agencies. Mistakes are also made, so getting a credit report from each one is the best way to make sure that everything is accurate.

Once you have made sure that your credit reports are accurate, you can start taking steps to improve your credit rating. By far the most important thing you can do to improve your score is to pay your bills on time. Paying bills on time accounts for up to 35% of your credit report score with your recent bill paying history carrying more weight than your past history. That means by making all your payments on time, you can immediately move your score in the right direction. This is the single easiest way to improve your credit score.




In the same vein, missing even a couple of bill payments can have a terrible effect on your score. Again, recent history is given more weight than past history, so even those who have had clean records up to that point can see their credit scores fall dramatically with a few missed payments. In addition, some credit card companies have started to use the credit report missed payment as an excuse to immediately raise your credit card interest rate. This is an important reason to make sure those payments get in on time.

In addition to making sure that you pay your bills each month, reducing your debt load will also improve your score. The less debt you have, the better your credit score will be. For those who use credit cards frequently for the rewards they offer, but pay off their card each month, you still may be hurting your credit score. Credit scores fail to take into account who carries a balance on their accounts and who pays them off each month, but simply report the outstanding balance on the cards at a specific point. That means that even those who religiously pay off their credit cards each month may appear to have a lot of debt just before they pay off their credit card bill, lowering their score if their report happens to be accessed at that point. For this reason, those who will be applying for a loan should reduce or stop using their credit card a few months before applying for the loan.

While closing old credit card accounts that are no longer used has been the general advice of financial experts in the past, this may actually hurt your credit score. This is not to be used as an excuse to keep accounts open so you can charge on the account more (which will also lower your credit rating), but the facts are that closing an account lowers the amount of credit you have available which makes any outstanding balances you have with other credit cards factor more in your credit score calculations. This will usually result in a lower score. In addition, if you close your older credit card accounts, this can shorten the appearance of your credit history which can also lower your credit report score.

Another piece of advice that many financial experts in the past have given is to avoid credit counseling since this will adversely effect your credit score. While this was true in the past (and still is true with some institutions that use the old method of calculating scores), this began changing a few years ago and today credit counseling references are usually not factored into your credit report score. Any references to credit counseling that do appear in the report are usually removed after the repayment plan set up by the credit counseling service has been completed.

Be careful not to confuse legitimate credit counseling services with debt settlement firms. Credit counseling firms can help to consolidate payments and lower the interest rates you pay, but you will still typically pay the full amount you owe to your creditors. Debt settlement firms typically have you pay less than you owe and this will certainly reflect negatively on your credit report score. Since not all debt settlement firms are the most legitimate operations, some have been known to simply take your payments and never forward them to your credit card companies thus making your credit report even worse.

Finally, avoid bankruptcy at all costs. A bankruptcy will certainly move your credit report score into the sub-prime level meaning that getting credit in the future at reasonable rates will be extremely difficult if not impossible. Contrary to popular assumption, this doesn't mean that you won't be offered credit. High interest credit card lenders love to offer credit after a bankruptcy because they know that once you file bankruptcy, you are not allowed to do it again for six years. You will, however, pay dearly for this with the outrageous interest rates they charge. Furthermore, most general lenders will refuse to make loans to anyone with a bankruptcy on their credit record and it can also have an effect on areas outside of your finances since employers, landlords, insurers and others also often access this information.

You can see that quick repairs to negative credit reports don't exist, but there are legitimate steps you can take immediately to improve your score. Start today and keep up with it over time, and you will see your credit report score continue to rise.

Last edited by james.hendrickson; 01-31-2017 at 10:55 AM.
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Old 09-05-2007, 07:34 PM
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very informative article! is there a point in credit counsilers anymore? most of what they tell you you can also find in books, forums etc..
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Old 01-02-2008, 09:19 AM
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What's great now is that you got a few agencies giving you free credit scores on the internet.
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Old 01-28-2008, 07:46 PM
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pay your biils every month on time ..
Also have a low balances or o balance
and never be late
your fico score will go through the roof
anthing above 700 is a elite group
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Old 02-05-2008, 04:38 AM
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Quote:
Originally Posted by accounting View Post
What's great now is that you got a few agencies giving you free credit scores on the internet.
Free credit scores? I've seen and know of free credit reports.
Although, I believe there was a federal mandate to do this (although I'm not 100% sure).
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Old 02-05-2008, 04:43 AM
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Quote:
Originally Posted by loanstar View Post
very informative article! is there a point in credit counsilers anymore? most of what they tell you you can also find in books, forums etc..
There will always be those that cannot handle their money properly. Either because they were never taught how to, or they don't care to see the err of their ways.
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Old 11-02-2008, 12:37 PM
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keep low balances on credit cards, pay bills on time, don't open new credit

Last edited by jeffrey; 11-02-2008 at 06:41 PM.
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Old 05-02-2009, 02:47 AM
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Thanks for sharing your experience with me. I am very glad to here
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Old 09-09-2009, 01:49 AM
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Post Steps To Increase Your Credit Score

The first step is to get hold of your current credit reports. The Federal Trade Commission (FTC) has set up a new website annualcreditreport.com where you can now get a copy of your credit report free of charge from all three of the credit report agencies (Equifax, TransUnion and Experian) each year. It should be noted that the credit reports must be ordered from the FTC site to get them for free. If you order your credit report directly from the credit report agencies' sites, you'll be charged a fee for the report. I like this information very much
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Old 08-11-2014, 07:26 PM
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Hi, thanks for sharing this useful thread. Keep posting.
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Old 08-14-2015, 11:34 PM
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Currently several credit cards will post your credit score on your bill each month. I have found it interesting to track it going down and bobbing up each month as I pay my bills, etc. For those that are concerned about their credit, this is a much easier way to track it than going and requesting a report every couple months. We 'prepay' for our propane each fall, since even with paying interest, we come out about $1000 less in cost than if we pay on a monthly fill up basis. When that first charge went through my score(since that card is in my name)dipped aobut 20 points. As I have paid it off each month it creeps back up.

I love working with numbers, so this is yet another way to track the health of our spending. Of course if you notice a steep nose dive, you would want to request a full report to see what is going on unless you know it is the fact that you missed the due date on 10 bills in the last couple of months. You shouldn't run your financial life to increase your credit score, but a well-run financial life will on its own increase your score as you go along.
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Old 01-18-2016, 03:28 AM
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Hi Jeffrey
Thanks for sharing this useful information.
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Old 01-21-2016, 12:02 AM
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Default Steps To Increase Your Credit Score

Hello everyone!

Here are few steps, you need to follow these steps to improve your credit score.

1. Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
2. Keep balances low on credit cards and other "revolving credit."
3. Apply for and open new credit accounts only as needed.
4. Pay off debt rather than moving it around.

Well, If you have bad credit report, then you may get the help of credit repair experts or you can also do-it-yourself, if you have the right knowledge.

These professionals are well-trained in repairing the credits. If you find your credit reports are not good and if you have some problem with your credit reports then credit repair experts assure you to correct them immediately.

Well-maintained and good credit report histories can help you in getting various helps from the government, in getting loan for business or other purposes.
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