If you haven’t taken a look at your credit score lately, make it a priority to do so. Your credit score is taken into consideration any time you apply for credit or a loan, but there’s even more to it than that.
A landlord will check your credit score before deciding whether or not to rent to you. Your insurance company uses it to predict how many claims you will file and sets your rates accordingly. The gas or electric company may require a deposit if you have a low score. Negative marks could result in higher interest rates.
Read on to find out how to increase your credit score, how to get a free credit report and how to remove negative marks from your credit report. You’ll also learn what to look for when shopping credit repair companies.
Follow these 10 tips to increase your credit score in as few as 90 days:
1. Know your score
Before you can increase it, you have to know what it is. If you don’t know how to get a free credit report, contact Experian, Equifax and TransUnion. They must provide you with a free copy once a year, but you have to ask for it. You may also find a free service on the internet, but make sure it has a good reputation.
The report will show all your accounts with lenders. Some examples are credit cards, mortgages and medical bills. It will list the date that each account was opened and closed, the amount of each loan, the credit limit, the balance owed and the payment history.
Late payments, nonpayment and approaching or exceeding your card limits negatively affect your score.
The scoring breaks down this way:
• 800 + = Exceptional
• 740 to 799 = Very good
• 670 to 739 = Good
• 580 to 669 = Fair
• 579 and below = Poor
2. Notify the Bureau of Errors
First, verify that your Social Security number is correct.
Comb the document for errors. Make sure that you recognize all the accounts listed. Check reports of late payments against your records. If you’re reading the report online, an option to dispute will be provided. Otherwise, send your disputes in writing. You may have to be patient, but once you’ve initiated a dispute, the bureau will investigate and report back to you when the issue is resolved.
3. Appeal to Human Kindness
Let’s say that you were an excellent Visa customer until you suffered six months of unemployment. You’re catching up now, but late payments are posted on your credit report. There are two ways that you can appeal directly to the credit card company.
The first is to ask for a goodwill adjustment. Write a letter highlighting your excellent payment history before the layoff. Explain what happened. Ask your creditor if he’d be willing to remove the derogatory marks.
The second way will only work if you have the funds to pay a delinquent balance in full. Offer to pay the debt in one lump sum if the card company will change the “past due” notation to “paid as agreed.” Be sure to get everything in writing before you pay the bill.
4. Try To Get Your Limits Increased
In most cases, using more than 50 percent of your available credit hurts your score. If you have a balance of $3,200 on a card with a $5,000 limit, ask to have the limit raised to $7,000 or $8,000.
Just be sure that the increase in available credit won’t tempt you to run up more debt.
5. Get Another Credit Card
Opening a new account will also increase available credit and improve the credit-to-availability ratio. Choose a card with no annual fee, and don’t carry a balance on it.
Again, if you’re not disciplined about saving and improving your score, this could backfire.
6. Do All You Can to Pay Down Balances
If you’re already working on credit repair, chances are good that you’re on a tight budget.
Thinking of creative ways to increase your income and tackle your balances, however, will significantly improve your score. Go without cable for a year. Pick up a part-time job. Sell something that you no longer need. Trade down to a less expensive car.
When you start chipping away at interest, reducing debt will snowball.
7. Piggyback on Someone Else’s Credit
If you’re a trustworthy type, ask a friend or relative with good credit to add you to his or her account. You’ll automatically benefit from his credit score.
Don’t ruin a perfectly good relationship, though, by running up a balance or making late payments. If you put a charge on the card, pay it in full right away.
8. Don’t Clean House
Resist the temptation to cancel long-time accounts that you’re not using anymore. Holding an account for 15 years, say, slightly improves your score. If you cancel cards, start with the newest.
9. Pay On Time
Depending on the creditor, even one late payment can affect your score. If there’s no avoiding a late payment on something, pick a bill that won’t likely be reported to the credit bureaus. A late electric payment is preferable to a late house payment.
10. Look Into Credit Repair
If you’re getting nowhere on your own, you may need to hire a professional service. There are legitimate credit repair companies, but you must use due diligence to find them.
Reputable credit repair companies usually charge a nominal monthly fee, but they don’t ask for money up front. They explain your legal rights. They work to consolidate your debt into one manageable monthly payment. They help you remove negative marks from your credit report. They persuade lenders to drop collection attempts and waive or lower interest.
Reject any company that provides you with a “new Social Security number.” That’s a scam, and representing yourself with a false number is a federal crime. No legitimate operation will advise you to dispute marks that you know are true. The more outrageous a company’s claims – such as “We guarantee to erase bad debt forever!” – the more suspect it is.
Improving your score takes commitment, discipline and patience, but the rewards cannot be overstated.