Maybe you're trying to secure a home loan. Maybe you just want to enjoy lower premiums on car insurance. Or, maybe you just want to be better with your money.
If you find yourself making money mistakes and seeking higher credit scores, here are eight essential ways you can raise that all-important number and retake control of your finances.
1: Get A Secured Credit Card
Unlike traditional credit cards, secured credit cards are safeguarded for the same amount you deposit with your bank – making it impossible to go over your limit. Secured credit cards are a great option for the credit-weary, and can reestablish your responsible payment history over time.
2: Pay Off the Highest-Interest Debts First
The best way to tackle your debt is to make your payments strategically. Take a look at your various credit cards and pinpoint the ones that have the highest interest rates. Because these cards have higher interest, you're actually paying more over time as opposed to the ones with lower rates. That's why it's so important to take care of your high-interest debts first. If these debts get out of hand, companies like CreditGuard will use similar principles to construct a debt management program and reduce that all-too-common burden of interest.
3: Take Out an Installment Loan
Installment loans are loans you pay back bit by bit over a scheduled amount of time. Installment loans vary in duration, but some can be as short as a few months. By effectively paying off an installment loan, you’re establishing yourself as a responsible borrower and raising your credit score a little more with each payment.
4: Arrange for Re-Aging
“Re-aging” is when you make a certain number of payments in full and on time in exchange for the lender wiping your record clean of everything that came before it. Not every establishment will agree to this, but it never hurts to ask.
5: Build Your Credit
Effectively using your credit cards can drastically improve your credit score. The more history you have with your cards, the more attractive your credit report will look to banks and insurance companies. A robust credit history can improve your credit report because it shows potential lenders that you have a proven history of good credit.
Though credit cards can improve your credit score, they can also damage it. So before you start using credit as a means to bolster your credit, make sure you have a budget already in place.
6: Watch the Language
Don't be satisfied with debts that show only as “settled” on your credit report. Instead, ask that they be revised to “current” or “paid in full.” While it won't significantly affect your credit score, you don't want lenders who are already on the fence being swayed by financial jargon.
7: External Errors
Is your credit score lower than it should be? It's possible you're paying for an error on your report. According to a FTC report, five percent of all credit reports have errors that could affect potential loan terms. Therefore, be sure to take an in-depth look at your report for strange charges, unexplained debts or accounts with companies you've never seen before. If you find any errors, be sure to contact that particular credit bureau immediately.
8: Ask for the Eraser
It may sound too good to be true, but sometimes creditors will simply delete a negative action item from your report if you ask. It's called a “goodwill adjustment,” and it can be invoked if you have a strong relationship with the company or a clean lending history with few blips.
If you're serious about improving your credit score, use these eight tips as a guide to understanding and modifying what goes on your report.
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