Credit Rehab: Perfect Credit in 5 Steps
Loop21's 3-part series "Credit Rehab" will put you on the road to credit recovery in no time.
When it comes to improving your credit score, there's really no need to turn to a company to “repair” it. You can do what needs to be done, and we'll show you how.
Here are five simple, fail proof ways to get your credit on the upswing starting today.
--Be clear on what counts. Before you even attempt to improve your score, do a reality check. Do you really understand what goes into building your credit score? You have to know what is taken into consideration in order to know where you need to get to work. If you're not sure, go to My Fico, where you'll find details on what metrics really matter. For example, payment history, the amount you owe, and length of credit history are essential to creating your score.
--Never pay late. In this high-tech era, there are no excuses for paying late. Creditors don't want to hear that you mailed your bill on time and that the postal system caused a delay. Avoid the drama. Automate your bill payments. Or, if you don't want to automate, take advantage of technology in another way and get text or email reminders that bills are due so that you have plenty of time to pay them.
--Devise a reduction plan. Who doesn't want to be debt-free? Face the reality of how much you owe and to whom you owe. Develop a plan to pay off, or at least reduce those amounts. Hone in on cards with the highest interest rates. You could also focus on paying off the smallest balance and get a psychological win that will keep you pumped up to pay down others. High outstanding debt impacts your score.
--Forget these moves. According to FICO there are a couple of steps you don't want to take. For example, you don't want to close unused credit cards as a short-term strategy for raising your credit score. It's also not a good idea to open several new credit cards that you don't need, just to increase your available credit. This approach could backfire and actually lower your credit score.
--Stay vigilant. Think of your credit score as an all-important number, like your Social Security. At least once a year, check your credit report. You can get one for free at Annual Credit Report. Look for errors. Mistakes are common, but don't take them lightly. Write a letter to the credit reporting agencies to inform them of any problems you find.
What tips do you have for raising your credit score?