These measures may make the difference between having a score of 550 and 780.
To improve your credit score seem intimidating? It need not be. Taking a few small steps now can make the difference between a 550 and 780. Follow these tips to see your score improves.
1. Request a copy of your credit report
You are entitled to a free credit report each year in each office of consumer credit nationally – Experian, Equifax and TransUnion – through the Fair Credit Reporting Act.
“It is important to remember that consumers have more than one credit report. As there are three credit reporting agencies, different information on each of their credit reports can differ,” said Clifton M. O’Neal , senior director of corporate communications for TransUnion. Request a free credit report “can help consumers keep an eye on all their financial activities.”
O’Neal advised to check each report for fraudulent activity and to correct any errors. website of each credit bureau provides information on how to correct errors.
2. Take steps to improve your credit score
Credit bureaus and other companies follow the information contained in your credit file, and the tightening of a three digit number called a credit score. Having a low credit score will raise a red flag to lenders and could lead to the rejection of a loan application. Or even if the application is accepted, your interest rate could be much higher. In other words, if you want to buy a house or a car, improve your credit score is an essential first step.
“If you go to apply for credit at any point in the future – if a new credit card, mortgage, line of credit mortgage or a small business loan – your credit score depends very much on little or a lot you’ll have to pay for the credit… if you get it all, “says Russell Wild, certified financial advisor and co-author of” A Year of organized life financially. ”
You can improve your credit score by paying bills on time, keeping your debt to less than 35 percent of your available credit, paying down debt and to dispute errors on your credit report.
3. Read (and understand) the terms and conditions of your credit card contract
Nobody wants to read the fine print, but it contains all important information on payment terms, interest rates, annual fees and penalties. Your credit card agreement – also called “terms and conditions” card or contract – it has, if often takes the eye health and reading comprehension at the college level.
“Most people do not bother to read the terms and conditions, and that’s a mistake,” said David Jones, president of the Association of Independent Consumer Credit Counseling Agencies (AICCCA). “You should not be surprised if your interest rate rises because you missed a payment. That’s all there in black and white.”
Most credit card agreements are difficult to understand, but that could change: Under the 2010 reform of Wall Street and Consumer Protection Act, a new Consumer Financial Protection Board shall have power to impose changes in contracts to make them easier to understand.
4. Read your monthly statements
According to Jones, credit card statements are easier to understand than ever. Credit Card Act of 2009, whose main provisions came into force in February 2010, required a new design and disclosure requirements to make statements more user friendly. Among the requirements, fees for late payments and what the money paid in fees and interest on different types of accounts must be provided. CreditCards.com has created an interactive look at the new credit card statements, using examples from all major card issuers.
If there is something that makes no sense to call your credit card company or a credit counseling agency approved by the AICCCA or the National Foundation for Credit Counseling to ask questions.
5. Repay – or pay – the balance of your credit card
“As soon as the bills come in January and cardholders realize how long it will take them pay for their holiday spending, pay bills credit card becomes a priority,” said Jones.
One of the changes required by the Act was that the MAP card statements should show how long it will take to pay off a balance if you pay only the minimum.
When it comes to paying credit card balances, avoid making new charges focus on the repayment of the card with the interest rate as high and always pay more than the minimum payment.
“Even if you can pay $ 5 over the minimum balance is a good idea because it goes straight to the capital and help reduce your debt, even a little,” said Jones.
6. Use credit cards that match your spending habits
Choose the “right” card at the checkout can save you a bundle, according to Wild.
Consider the terms of payment, he said, “including the interest rate you will pay if you do not pay your debt at the end of the month.”
Cardholders who do not pay their balance at the end of the month should be prepared to sacrifice to get a rewards card that has a lower interest rate.
Wild also suggests being careful with cards stores, especially those promising zero interest. If you have a history of late payments, interest rates can skyrocket which is a costly mistake.
Annual fees can also accumulate. If you pay $ 50 per year on airline miles for multiple cards, but never cashed in a single air mile, these accounts may not be the best solution for your consumption habits.
7. Think twice before canceling cards
Your credit score is determined in part by the variety of accounts you have, and if you ate a lot of your available credit by carrying balances. In other words, the balances on several cards will affect your credit score. Wisely manage these balances and do not rush to close accounts.
“Any major change in your habits, credit cards, including cancellation, will raise a red flag and an impact on your credit score,” Jones said. “If you want to reduce the number of cards you carry to cancel a card and a few months later cancel another rather than cancel them both. ”
Having multiple lines of credit balances and gives you a low rate of credit at low rates of use, which is good for your credit score. Make sure you keep your balances low – overall and on each credit card you have. And use of each card from time to time if the credit card company not to cancel the account.
If you’re struggling with debt and have too much available credit can lead to the temptation to spend, you might be better to cancel credit cards. It is best to let your credit score take a hit to close the accounts of dealing with the consequences of the debt burden too much and not being able to repay.
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