Boost Your Credit Quickly with These Simple Tips

Boost Your Credit Quickly with These Tips- 150x150Even if your credit is in what is considered to be a good range, boosting it a bit never hurts. Increasing your credit score becomes very important if your score is within the lower range. Living with a low credit score can be difficult, especially if you plan on buying a home or any other major asset. Repairing a credit score takes time and discipline, but there are ways in which you can raise your score quickly. You won’t be able to get over bankruptcy or foreclosure overnight, but the higher you can get your credit score, the more chances you will have of being approved for a loan. Here are a few tips that can help you quickly improve your credit score.

Use Your Credit Cards in a Smart Way

Having too much debt can hurt your credit score. Using more than 30 percent of your credit limit on your credit card can actually lower your credit score, so it’s better to pay off the larger balance and use other cards with a low balance instead. Spreading the debt among several credit cards is also a good idea, as long as you remember that you can end up paying a larger interest rate.

Check Your Credit Report for Errors

You are entitled to one free credit report check per year, so take advantage of it and look over it closely in order to find any errors or misinformation. Credit reports are usually pretty accurate, but it’s always a good idea to check. Even a small error which may not seem too important can hurt your score and affect the interest rates that you will receive, or even your ability to take out a loan.

When checking your credit report for errors, make sure that you look for any erroneous information on your payment history and credit limits, missed or late payments that were actually made on time, and billing disputes that you have won. Notify the credit bureau about any error, no matter how small it may seem. The bureau will open an investigation and resolve the issue within 30 days.

Pay Off Larger Balances

Having too much debt will surely affect your credit score in a negative way. Getting rid of some of that debt is helpful, especially if you can pay off larger debts. Generally, it is better to access some savings or investments in order to pay off some debt and increase your credit score, than to get a mortgage loan with a low credit score and end up paying thousands more in interest.

Ask Your Creditors to Forgive You

Unless you and your creditors have had multiple incidents, or you have a really big negative spot on your credit report, you can simply ask your creditors to remove a negative item from your report. This will probably only work with minor items, but having several removed can really help your credit score. Remember that removing an item from your credit report usually works better right after the incident, and not months or years later.

Negotiate With Your Lenders and Creditors

If you are able to pay off some debt, but don’t want it to show on your credit report, you can negotiate with your creditors. Ask them not to report the unpaid debt in exchange for you paying it off. Getting their money is more important for creditors than hurting your credit score, so they will usually accept.

These tips will help you boost your credit quickly, but you won’t go from bad credit to good or perfect credit overnight. Repairing your credit will take a few years, but doing everything in your power to help it recover is very important. So start by checking your credit report for errors, come to an agreement with your creditors and pay off some of your debt, and you will be on the right path to repairing your credit score.

Top 10 Components for Maintaining a Good Credit Score

images (9)A good credit score is invaluable, especially with the state of our economy. If your credit score is less than acceptable, then landing a loan deal might be as hard as finding a needle in a haystack. Denying those with poor credit scores has been a trend with many lenders; they do so in order to minimize losses as a result of higher default rates being associated with lower credit scores. Typically, a low credit score is synonymous with poor financial management and an inability to make monthly payments in a timely manner. So it is very important to do what you can to have a good credit score as you will have access to a variety of much better loans and rates.

Importance of Good Credit Scores

  • Low interest rates. Lenders always compete for borrowers with a good credit score. Many lenders will attempt to entice you their offers of low interest rates– the golden rule is “the higher the credit score, the lower the interest rate”. This is a sign that the down payment for a loan will be lower and you will also be able to complete repaying a loan within a relatively shorter period of time.
  • Employment opportunities. Owing to the litigation costs associated with defaults, employers are constantly screening the credit scores of candidates before hiring. Employers are also interested in hiring employees who demonstrate a high degree of financial responsibility because this means they will not misuse the company’s resources.
  • High purchasing power. This is perhaps the biggest advantage of having a good credit score. You easily gain access to a variety of loan products with a large credit limit on each of them. Ideally, you can spend a relatively small amount of money on a car, expand your small business, buy a better home or send your child to college.

Components of Maintaining a Good Credit Score

Good credit scores, unlike the weather, are not controlled by Mother Nature or fate. Thus you must employ a formula to help you garner the highest possible credit score. The components below, among others, will help you to maintain a good credit score.

  1. Don’t hit the credit limit. Hitting the roof of your credit limit can badly damage your credit score. One way of maintaining a good credit limit is to set a credit limit target, say 50%, beyond which you will not spend.
  2. Control all your debts. Your credit always reflects all of the debts you have, from mortgages to consumer loans. They may strain your overall budget or create an imbalance in your income and expenditure equation, leading to more trouble. Controlling all of your debts will positively be reflected on your credit score.
  3. Make payments on time. Perhaps the best technique for maintaining a high credit score is the regular and timely payment of your credit card debt. A single missed or late payment can have an effect on your credit score negatively in addition to penalties.
  4. Don’t close old credit cards. Your credit history contributes to about 30% of your credit score. Closing old credit cards means deleting your credit history—which lowers your credit score. Even if you don’t use them regularly; keeping them open enables you to have a stronger history.
  5. Maintain few credit cards. Every time you apply for a new credit card, your credit score is negatively impacted. You should therefore maintain as few credit cards as possible. A single inquiry may even take some points from your credit score, depending on the nature and amount in question.
  6. Check your credit report regularly. All three credit bureaus entitle customers to a free copy of their credit report from annualcreditreport.com annually. Since human systems make errors, check for credit limits that have been underreported, loan amounts that have been over reported and delinquencies that have been misrepresented. Requesting correction from the credit bureau will help you maintain a good credit score.
  7. Use your credit card. You credit history contributes to about 30% of your credit score. Failure to use your credit will therefore mean a poor credit history. A golden tip is to borrow and then repay regularly. For instance, you can borrow and repay after a week or a month.
  8. Avoid credit fatalities. Public record issues such as bankruptcies can have an impact on your credit for about 7 to 10 years. Making too many credit inquiries can also kill your credit score. Since only time can repair this, the best way to maintain a good credit score is to avoid bankruptcy at all costs.
  9. Select and use your favorite credit card frequently. FICO has established a model that penalizes you heavily when you have multiple balances. However, you can limit this by concentrating a bulk of your spending efforts to a single credit card. In the meantime, you can use the other credit cards on an infrequent basis, like once every three months. Failure to use your other credit cards reduces your credit score while closing them down kills your utilization ratio.
  10. Check the behavior of your actions with the FICO simulator tool. FICO provides a free simulator tool which shows you how your score behaves when you undertake particular actions. This tool will intelligently inform you when you need to repay more debt, change your loan type, or take out a new loan.

Following these tips will surely help you to maintain a good credit score. And with high credit scores, you will be on the road to low insurance rates and low or no security deposits. Be a guru in sound financial management today by striving to maintain a high credit score!

Top 10 Credit Score Myths

credit score myths- 150x150Having a good credit score is very important to both the borrower and the lender. How much you can borrow and what your interest rates will be largely dependent on your credit score. It may not sound like a lot, but paying 1 to 2 percent more on an interest rate will make the overall cost of the loan go up by a few thousand dollars. Also, there is a chance you won’t be able to borrow as much as you hoped if your credit score is less than perfect. Another negative side of having a bad credit score is that more and more employers use credit reports to evaluate applicants. In this economy and job market, having a good credit score is important. It is also important to learn about your credit score and mortgage approval.

Credit Score Myths

To have a perfect credit score is not the only thing that matters. Holding on to a high score is also important, but, with all the factors that influence credit scores, you will find that it is not as easy as it may seem. While credit score is affected by a lot of things, there are also some myths regarding what’s good and what’s bad for your credit score. Here is a list of the top 10 credit score myths that have been circulating around for years:

  1.  Too many inquiries will hurt my credit score. Checking your credit report will not hurt your credit score. When you pull your credit report, this is seen as a “soft inquiry” and it will only show on a personal credit report. However, when a lender checks your credit report, this is considered a “hard inquiry”, which will be added to the report and will affect your credit score. Checking your credit report for yourself is actually encouraged because it will help you manage your finances better. You can get a yearly free credit report on websites like annualcreditreport.com.
  2. Paying my debts will result in a higher credit score immediately. While paying off your debt is encouraged in order to increase your credit score, this will not happen instantly. Closing your accounts, on the other hand, can hurt your credit score. A very important factor in credit scores is the relationship between the total balance and the total credit limit. The increase in your credit score after you pay off your debts will largely depend on your credit history.
  3. My credit score is perfect because I haven’t done anything wrong. While it is logical to think this way, this may not be true at all. It is estimated that 70 percent of all credit reports have errors in them, and that may lead to a lower credit score. If you encounter any errors on your report, it is your right to contact the issuer and demand that they are fixed.
  4. My credit report looks good, so I shouldn’t be worried. If you have checked your credit report and think that everything looks good, keep in mind that there are actually 3 national credit reporting agencies: Experian, Equifax and TransUnion. If you have only checked one of them, there is still a chance that there might be errors on one of the others.
  5. Not using my credit cards will help my credit score. Using your credit cards to pay for things like groceries, gas, or utilities will demonstrate to the lender that you are responsible with managing your credit. This takes some discipline, but using credit cards will help you build positive history which will, in time, increase your credit score and ensure that you are offered the best terms and interest rates when applying for new services.
  6. My credit score is influenced by how much money and assets I have. Because credit reports don’t show bank account balances or your assets, these numbers won’t influence your credit score. They will, however, show if you are not making your monthly payments on time or if a bank has turned over the balance that you owe to a collection agency.
  7. Credit counseling will lower my credit score. Credit counseling doesn’t influence your credit score, but the fact that you have been in counseling will show up on your credit report. This may not look good in the eyes of a lender, but they will be more interested in your monthly payment history.
  8. A low credit score won’t prevent me from being hired. Companies in some industries require a credit check before hiring in order to prevent application fraud. Your written permission is required before the employer can pull your credit report, so you will have the chance to explain any issues that might come up.
  9. A good credit score allows me to borrow a lot. You should always borrow only as much as you need and as little as possible. The amount that you owe and the credit that is available to you is considered by the credit score. Hitting a credit card limit will negatively affect your credit score.
  10. My race, gender, marital status, religion, or education level can affect my credit score. Under the Equal Credit Opportunity Act, your credit score cannot be based on any of the above. Also, this information will not show up on your credit report.

It is very important to keep an eye on your credit score, know what affects it and what doesn’t, and what your rights and limitations are. Credit score myths can lead to very expensive mistakes, so recognizing them will help you avoid a lot of trouble, some which may even take years to resolve. Now, you may want to check out this helpful related article on getting pre-approval for loans.

Improve Your FICO Credit Score

improve-credit-scoreBefore you apply for a mortgage, you must ensure that your credit score is in the best shape possible. Banks are simply not lending money to people with below “Grade A” credit scores. Here are a few tips to help you increase that score. Remember to take it slow and easy. It takes time to repair your credit and there are no magic bullet fixes. You must manage and take care of your credit over time. If you follow a plan and make good decisions, you can increase you credit score and be eligible for a mortgage loan that will ensure you get that dream home you have been searching for.

  1. Get a free copy of your credit report – The first step to fixing bad credit is to find out exactly where you stand. Get a copy of your report and scan it for errors or discrepancies that can be fixed.
  2. Setup automatic bill pay or payment reminders – Paying your bills consistently, on time is one of the biggest factors affecting your FICO score.
  3. Eliminate unwanted debt immediately – having no debt on your credit report will make you look responsible to lenders. It’s a tough job, but you need to eliminate credit card debt as best a possible.

Some quick tidbits you should know:

  1. Always get current on missed payments first
  2. Paying of a collection debt will not remove it from your report
  3. If you are having trouble, see a credit counselor and make a plan
  4. Always keep credit card balances as close to $0.00 as possible
  5. Pay off debt when possible, rather than moving from card to card
  6. Don’t close unused cards and don’t open new cards to try and manipulate your score
  7. You can check your own credit without fear it will hurt your score as long as you order directly from the credit agencies and not through a 3rd party
  8. Use your credit cards as much as possible while still being able to pay them offfix credit

Fixing your credit is much like losing weight. You have to find out where you are, make a plan to get where you want to be and then diligently stick to that plan. If you fix the errors and then follow good credit guidelines you will improve your score and be able to get a mortgage on that dream home you have been hoping for.