New Year, Better Credit Score: Post 3

So FICO has branded you with a not-so-desirable credit score and you have made the resolution to bring it up as much as you can.  You know what your score is comprised of but what’s next?  Here are the best tips for improving your credit score.  These are the ones I followed to increase my score.

1. Pay Down Your Debt.

Don’t stop reading yet.  I know you are thinking “if I could pay down my debt don’t you think I would have done it by now?”.  I completely understand what it’s like to feel like the amount of total debt is too overwhelming and you don’t think you could ever pay it off.  But try to remember even if it takes a while, the lower the total amount gets the higher your score will go.  Try coming up with a budget that allows you to pay a little more than the minimum payments each month.  Remember also, not all debt is bad.  Items like mortgages and car loans on your credit report show that you can handle your finances.  The debt that can bring down your score are items like personal loans and credit cards if you have balances that are too high. Try looking into getting your interest rates lowered which will make it faster to pay off.

2.  Always Pay On Time

While you are chipping away at the debt always pay your bills on time.  Try setting up automatic payment for your bills so you know they will always get paid on time.  If you happen to be late once, call the lender and see if they will take the late payment off so it doesn’t show up on your credit report.  They are usually willing to accommodate good customers.

3. Spread it Out

If you have more than one credit card spreading the balances between cards could help your score slightly since you are lowering the ratio of card balance to credit limit.  Be warned, that you should not open new accounts in order to accomplish this because new accounts can lower your credit score.

4. Don’t Stress About Making Your Score Perfect

Once your score has reached 780, you are considered as having above average credit.  Trying to reach a score beyond that really isn’t going to make a difference in the interest rates your receive beyond that.

5.  Check your Credit Report Often for Errors

More than once I have found discrepancies on my credit report that were lowering my score.  One was an account listed on my report that in actuality belonged to a family member that lived at the same address. If I hadn’t have caught those errors I wouldn’t have been able to increase my score.  If you find an error there is a link in your online credit report for submitting disputes.  If you fill out the pertinent information the credit reporting agency should be able to sort the problem out for you.

6.  If All Else Fails Mail a Letter

Remember the expression “It never hurts to ask”.  I had a couple of late payments that were so old I had no idea whether they were accurate or not.  I ended up sending a letter to Experion, Trans Union and Equifax requesting that the negative items be removed because I had never paid these items late.  You can use this template to write your letter.  They all wrote back saying they would investigate the claim and two of the agencies removed the item from my report.  Equifax is run by the devil and said they couldn’t find reason to remove it.  But two out of three is not bad.