If your credit rating is faltering or has hit rock bottom this year, there are ways that you can boost your credit scores. It is important to take an honest look at your immediate circumstances and be real with yourself to move forward. 2015 is right around the corner and if you struggled all year or even over the last few years, these time-tested tips can give you a sense of order to move forward.
- Obtain all three copies of your credit report.
There are three main credit reporting agencies and not all companies will report to all three of them. It is vital that you obtain copies of your credit report from all three agencies. This way, if you have a problem on one report it may not necessarily show up on the other reports and you can still ward off any mistakes or issues. Don’t just get a report from one of the major agencies, get all of them.
- Check your credit report often.
Experts advise checking your credit report at least once a year. Some people, however, obtain their reports as often as every quarter. It really depends on the activity and other factors as to how often you should check. The common consumer who only has a few lines of credit can probably get away with checking less often. It is important, though, to check your credit report so that you can ward off any problems, issues or even unauthorized activity.
- Delete your negative credit if possible.
If you have any negative credit such as delinquent accounts or slow payment history you need to work to bring it all current. Credit repair is not as easy as it used to be, but you can pay on delinquent accounts to get them to a current status. You should also begin to make regular, timely payments on a payment history that is slow or lagging. If you can pay your delinquent accounts all at one time to bet them to a current status, but if that is not a possibility, you can pay on the accounts in increments and pay it a little at a time until current.
- Don’t close old accounts.
While you may be tempted to close old accounts, resist that temptation. Keeping old accounts open and current will show as current accounts on your report. This will show that you have active, good credit and will help to boost your rating. The longer that you have revolving credit accounts with no negative reports, the better it makes your credit appear. This translates to a better overall credit score. Many credit experts advise that you keep a balance a balance or 30 percent of your credit limit.
- Pay your bills on time – always.
You may think that this tip is rather obvious, but it still stands to be repeated. Your credit score can begin to decline even if you are only 30 days late in payment. Even if you pay every month, if you pay late every month, you are still damaging your credit. Your best bet is to make your payments on time every single month.
- Use credit to pay for credit.
This is an old, tried and true technique for credit building. Get a secured credit card for “x” amount of dollars. Once you receive your card, get a cash advance of 70 percent of your credit limit. Do this with a second and third cards as well, using the cash advance from the previous card. Open a checking account with the cash advance on the third card. Use this checking account solely for making payments on your three cards. Pay on time each month and your credit score will increase. It may drop initially because of the three accounts taken out so quickly in succession, but within 4 months it will have rebounded and your score will be greater.
- Maintain different types of credit.
Diversify your credit with revolving accounts, unsecured loans and secured loans. This shows that you are able to manage several different types of credit at once. Get a vehicle, mortgage or personal loan so that you can have an installment loan on your credit report and charge cards give you the revolving credit. This shows that you can handle short term credit, long term credit, fixed payments and variable monthly payments.
- Don’t file for bankruptcy.
While bankruptcy may seem like an easy way to get out of debt, resist the temptation. Don’t file for bankruptcy or foreclosure; they remain on your credit report for 10 years and will cause your credit score to plummet. However, the older a bankruptcy becomes (as long as it is combined with a credit history that is rebuilt), the less impact it will have on your credit score.
- Don’t open new lines of credit.
Do not open new lines of credit unless you absolutely must. Every time that you apply for credit there is an inquiry that is placed on your report. This often causes your credit score to drop slightly. This is more important when you are just starting out or when you are rebuilding credit because you either show no payment history or a negative payment history. That, combined with a lowered score can show you as a credit risks to creditors.
- Stay on top of all credit issues.
As soon as you realize that there is a problem with your credit, you need to take care of it as soon as possible. When you are staying on top of your credit issues you can ward off problems that will destroy your credit score. This strategy will also help you ward off fraudulent activity that may occur on your account due to thieves and identity theft.
When you use these tips to boost your credit rating you will see great results. Your credit rating will improve with the structure you establish and you will have better access to credit if you never need it for emergencies. Emergencies can come at any time as we all know and your ability to some form of credit can truly help in a time of need.
Merry Christmas and Happy Holidays!