8 Steps to Help Improve Your Credit Score
One of the most important components of your overall financial health is your credit score. This is extremely important as it is an indication of your overall credit worthiness. Lenders and other interested parties will often use your credit history and scores to determine whether or not to provide you a loan. Beyond that, credit scores can also have an impact on your ability to get certain jobs, qualify for an apartment lease, or do any number of financial transactions. Since credit scores are so important, having a high one is extremely important. If you do not have a good credit history today, there is still a process that can be followed to help you to rebuild your credit and reputation. By following these credit repair strategies, you can see your credit improve both immediately and over a longer period of time.
1 – Review Your Credit Report
The first step in credit repair is to know where you begin. All three of the major credit bureaus are required to provide you with a free credit report on an annual basis. While the scores are not necessarily provided along with them for free, you can normally obtain them for a small fee. Since you are focused on improving your scores, paying this fee will be worthwhile as it will ensure you have a full understanding of where you stand. When you receive your credit report, you will be able to review both the summary and the detail behind it. The summary report will give you the aggregated credit scores, a summary of what has been negatively affecting your credit scores, and what is helping your scores. This information will allow you to understand what areas could be improved that will help to increase your credit reputation quickly.
2 – Understand the Credit Scoring Process
Before you start to manage your credit history, it is very important to understand what factors will influence the scores. Overall, the most important component of your credit reputation will be your history of making your loan and other obligation payments on time. Overall, this will account for 35% of your credit rating. The next biggest factor of your credit rating is your account utilization, which will account for about 30% of your total rating. Your account utilization ratio is defined as the amount of outstanding credit card and other revolving debt you have compared to your total credit limits. If this figure is in excess of 20%, it could start to negatively impact your credit score. Beyond that, the length of your credit history and mix of credit accounts will make up the balance of the credit scoring process. While some of these factors are out of your control, it is clear that managing your credit card balances and making all payments on time will help you to achieve a higher credit rating.
Fore more information on the credit scoring process, have a look at this helpful article from Equifax.
3 – Check for Fraud
If you want to increase your credit rating quickly, one of the best things that you could do would be to have fraudulent accounts removed from your report. When you are reviewing your account report, you need to make sure that all of the information that is reported is accurate. If you notice accounts that are listed that are not accurate, it could either be a mistake or evidence of fraud. In these situations, it is important that you have the accounts removed from your report immediately. It can sometimes take up to three months to have this data removed from your account. However, if there is fraudulent data on your report that is negative and weighing down your rating, having it removed will lead to an immediate improvement to your rating.
4 – Focus on Near Term Improvement
Once you are comfortable that all detail on your report is accurate, the next step in credit repair is to focus on areas that would provide you with immediate improvement. The most important part of your credit rating is your ability to make loan payments on time. Unfortunately, it can take years of good practice to see your rating go up. On the other hand, you can see a dramatic improvement in your credit rating if you are able to decrease your credit utilization rate, which is the second most important component of your credit rating. One of the best ways to do this is by paying down your credit card balances. For example, if you have a $10,000 credit limit and $5,000 outstanding balance, your utilization rate would be 50%, which will hurt your rating. By paying down your balance to just $2,000, your utilization rate will decline to 20% and your rating will go up dramatically.
5 – Secured Credit Cards Can Help Improve Your Credit Score
If your rating is low and you want to have it go higher, one of the best things to do would be to open up a secured credit card. Those with low scores may not qualify for traditional credit cards. This can then make it hard to actually get your rating to go up. However, many banks will still issue secured credit cards that can be a great credit repair tool. When you have a secured credit card, it will act just like a normal credit card, but you will have to post a cash balance to act as collateral. However, when you continue to make payments on time each month, your rating will slowly go up.
6 – Make All Payments On Time
Ultimately, one of the most important parts of any credit repair guide is to make all of your payments on time going forward. While there is a lot that you can do to make your scores go up immediately, having a long-term appreciation in your scores will require you to have good habits. The most important habit to have is to make all of your payments on time. Even being just 30 days late on one small payment could have very negative affects on your history report and rating.
7 – Freeze Your Credit
Many people that pull their credit report for the first time will be shocked when they find that there is inaccurate of fraudulent account data on it. Unfortunately, this can be very bad for your credit rating and it can take a long time to have the data removed. Since it can be very hard to monitor your credit report, one of the best things that you could do to protect your credit would be to have a credit freeze put on your report. When you have a credit freeze put on your report, nobody will be able to open up any type of account in your name. Further, not creditor will be able to pull your credit history and information, which will make it impossible to run your application. This can prevent someone from illegally opening up any type of account in your name. However, if you ever do need to apply for a loan or credit account of any time, you will need to spend the time to have these freezes removed for your account.
8 – Hire a Credit Repair Service
At The Law Offices of Adam C. Gomerman, we take great pride in providing the best possible service to our clients. Our Credit Repair service goes beyond one-time repair services by guiding you throughout the credit repair process, as well as advising you once you’ve completed our service. Our Credit Repair team, located here in Huntington Station, NY, typically a short drive from anywhere on Long Island, is dedicated to empowering you to make a significant, long-lasting financial impact that can potentially unlock your financial dreams.
Our local Credit Repair team, with oversight and guidance from Long Island attorney Adam C. Gomerman, is here to help, but it starts with YOU. Take the first step to an improved financial lifestyle by contacting our office today and scheduling your credit repair consultation.
Don’t let your credit score dictate your financial future.