Knowing your credit score is always the basic fundamental of repairing credit. It is more important to know what affects your credit score. And even more essential than that is knowing what you are able to do to improve your credit score.
Post resource: Know your credit score, and take steps to raise the number by Personal Money Store
Your free credit score
Doing something about your credit score is easier due to a financial reform. Free credit report services are advertised all online. Now these credit reports have to also include your credit score. You had to pay extra for that. But part of the lately passed financial reform bill makes sure that you can get a free credit report that involves your credit score once per year.
Low credit score?
Most people do not know how their credit score is affected by themselves. For instance, it was reported by Wallet Pop that lots of people assume if they pay their bills on time, their credit score is good. The truth is, even if you always pay on time, when your credit cards are maxed out, your score is lower than it should be. When credit bureaus see borrowing to the limit, they see risky behavior. Tackling excess credit card debt is your first priority when improving credit scores.
When repairing credit, settle credit cards first
To raise your credit score, you need to settle credit card debt first. You will find really only two types of debt. Installment debt is secured by collateral, like a car loan. Revolving debt is your credit card balances. For many people, credit card debt revolves forever, which is not good for the credit score. Since credit card balances appear to be unsecured, credit report companies like FICO say they’re more risky than installment loans. So paying off your credit cards will do more to raise your credit score than paying off your car.
College agencies should be paid off last
Unfortunately, if you’ve been taken to collections, your credit score is already hurt. Paying the collection agency won’t change the numbers. According to Bankrate.com, by the time your debt goes to collection, your creditor has already written you off. Although paying the collection agency will end the harassment, the payment won’t erase the delinquency from your credit report. Bear in mind that a surprise call from the collection agency can result from missed payments on everything from utility bills to library fines. Avoid collection within the first place.
No to charge cards
To keep your credit score from dropping, keep refusing that charge card every department store tries to sell you. This is because opening and closing credit accounts can lower your credit score. Wallet Pop said FICO credit bureau research has found that opening any type of credit account is automatically seen as more credit risk. If you end up getting that charge card and pay it off in full, your credit score will rebound in a few months, but it won’t rise above the level it was before you bought that new outfit.
Don’t cancel your credit cards
When considering credit repair, the deck is typically stacked against you. Especially when it lowers your score to cancel credit. When canceled, the line of credit with credit cards goes away. With less credit accessible, your credit score goes down. Instead of canceling, just zero the credit card out and throw it with your dresser drawer. New credit card rules prohibit credit card companies from canceling cards you do not use so you do not have to worry about that anymore.
Use loans wisely
Applying for an installment loan for credit repair can be risky, but it can work to pay down credit card debt with personal discipline. If you have some maxed out credit cards, the new installment loans for bad credit won’t negatively impact your credit score as much as those debts. For this strategy to lower your credit score, you’ve to make yourself pay down the credit card debt with the installment loan, and then you will need to throw the credit cards in the drawer until the installment loan is paid off.
More data about this topic at these websites:
Wallet Pop
walletpop.com/blog/2010/07/07/good-credit-score-secrets/
Bankrate.com
bankrate.com/finance/debt/3-easy-ways-to-rebuild-your-credit.aspx
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