Credit Scores Reviews

Credit Score Repair : How To Improve Your Credit Rating In Ten Steps

Written by Brian James

In today’s increasingly connected world, all of our actions have immediate consequences, some good and some less so. This is particularly true when it comes to credit score repair. One late payment can really take a toll on your credit score. Of course, having (and maintaining) a good credit score isn’t easy, but it’s a prerequisite for so many of the things we often take for granted. Hoping to buy a home? You’ll need good credit, or a serious credit score repair plan, to secure a decent interest rate on your mortgage.

On the surface it seems like a matter of kicking someone when they’re down. Having poor credit because you weren’t able to make a payment snowballs into higher mortgage payments, which will be tougher to make, and the possibility of yet another blow to your credit score repair plan. But, don’t despair .There are a number of things you can do to in terms of credit score repair. Here, we consider ten different options.

1) Only Ask for Credit You Really Need. Of course the best remedy is prevention. Before signing up for a credit card, mortgage, or car loan, make sure you really, truly need to ask for a line of credit in order to achieve your goals. If you can hold off on making a purchase until you’ve saved up enough money to pay upfront, do so and keep your credit rating clean and avoid needing a credit score repair plan. This may not be possible with big ticket items, like a house or a car, but if you can keep credit card purchases for smaller items like clothes to a minimum, you’ll see an improvement in your credit score in no time.

2) Make Payments on Time and in Full. If you find yourself in dire straits and you absolutely must ask for a line of credit, be sure to make your payments on time and in full. This is particularly important considering that a full 35% of your credit rating is based on your history of on-time payments. Don’t think of credit cards as a way of spending beyond your limits. Rather, consider credit cards a slightly delayed payment method. At the end of the month, be prepared to liquidate all existing credit card debt in order to avoid damaging your credit rating.

3) Review Your Credit Rating. Knowledge is the best defense. Order your credit rating from any number of on-line credit rating companies or directly from FICO, one of the most widely used credit scoring systems in the country. You may be able to glean some information from a free credit report. However, you’ll likely have to sign up for some credit related service in order to obtain your free report. The cost of paying for your credit rating report is well worth it. You’ll want to check all of the information very closely to verify that your name, address, and other personal information have been reported correctly and that all data on your existing credit accounts is up-to-date and correct.

4) Submit Dispute Letters. Once you’ve reviewed your credit rating, the next step in your credit score repair plan is to prepare dispute letters to the appropriate creditors. If you notice an outstanding balance from a creditor you’ve already repaid, you’ll want to write to them to request a review of this discrepancy. Be sure to include supporting documents with your letter, including proof of payment.


5) Eliminate Existing Debts. Another important step after reviewing your credit rating involves eliminating the debts you currently have. Once again, you’ll want to get in touch with your creditors in order to hammer out a payment plan that works for everyone. The goal is to quickly eliminate existing debt without generating more debt elsewhere. In some cases, you may be able to get the creditor to decrease the amount due by a percentage point or more, making it even easier to pay off existing debt, and repair your credit rating in the process.

6) Modify Existing Credit. While reviewing your credit report, be sure to make note of the terms of all of your existing lines of credit. Try to eliminate debt from the accounts with the highest interest rates first in order to quickly make a dent in your debt. Call creditors and ask about renegotiating your loans; some loans can be refinanced at a more attractive interest rate.

7) Make a Long-Term Financial Plan. Once you’ve started working on your credit score repair plan, you should consider making a long-term financial plan in order to avoid problems in the future. Enroll in courses on financial planning and credit. You’ll learn firsthand what you need to obtain and maintain a strong credit score. Plus, you’ll be able to meet others in similar financial straits. It’s easier to embark on the difficult road to credit rating recovery with the support of others in the same situation.

8) Avoid Excessive Inquiries. Keep in mind that multiple credit inquiries will have a negative impact on your credit rating. While most agencies allow for multiple inquiries during a short period of time, perhaps two weeks while a consumer shops around for the best car or the home of their dreams, excessive inquires are a red flag that can damage your credit rating. A great way to avoid excessive inquiries is to steer clear of applying for multiple credit cards in a short amount of time.

9) Consider Debt Consolidation. Debt consolidation is an option for those unable to get out from under their debt. Credit card consolidation allows you to make a single payment toward all of your existing credit card debt. Debt settlement plans also typically involve lower payments, making it easier to reach your financial goals, and stabilize your credit rating, more quickly.

10) File for Bankruptcy. While declaring bankruptcy may initially hurt your credit rating, it is an efficient option for eliminating existing debt and it may help you get back on track more quickly. Chapter 13 bankruptcy allows debtors to reconfigure their debts and pay them off according to the schedule set by the bankruptcy court. Those considering this route should speak with a qualified credit advisor in order to clarify the benefits and responsibilities associated with declaring bankruptcy.

About the author

Brian James

US Financial specialist with a financial Master degree. Speaking about credit scores range in US, credit cards and more.

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