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Ways to Improve Credit Score

By Edited Oct 27, 2013 1 1

There are really quite a few different ways to improve your credit score. While there is no single perfect method you can use for immediate results, there are, however, some things you can do to have fairly fast impact. So whether you're looking to buy a new house, decrease your interest rates, or just make some improvement to make life easier down the road, you should know about some of the ways to improve your credit score, and how to make it happen fast.

Track your FICO rating:

Keep track of your FICO rating if you truly want to improve your credit score. While simply knowing your rating won't increase it, tracking it can. By tracking, you will get fast notice of anything that happens with a negative effect. For many, the use of a service is the only way to go. Costs vary a little, but generally speaking, it's less than $20.00 per month. Being alerted to problems with your rating is one of the best ways to improve your credit score. Sadly, most people have no idea where they rank. If you are seriously looking for ways to improve your credit score, you will want to look into these types of services. Those that don't want the service, or cannot afford it could simply request their free annual report, as provided by law. Although not quite as effective, you will be able to review your report for no charge. It's really one of the best ways to improve credit score, and rating. Best of all, it can be relatively fast.

Dispute errors in your report:

Errors are not as uncommon as most people think. If you get a copy of your report, you should immediately look for inaccuracies. While not all consumers will have errors, those that can dispute credit report errors will get an almost instant increase, making it one of the fast ways to improve your credit score. The law is on your side with this one, so take advantage. Federal laws mandate a speedy resolution, typically 30 days. If the creditor cannot prove their case, you will most likely see the error removed from your report. In most cases, you can make the dispute in writing. There are many templates available to assist you with this. As you can guess, this is great way to improve your credit score. Best of all, it's really easy to do, and fairly fast. Your rating will increase.

Keep accounts current:

Almost nothing will damage your FICO rating more than having accounts in collections. You can really make some serious ground this way. It's really one of the best ways to improve your credit score. When accounts are in collections, it's an instant flag to lenders. If you want to improve your credit score, you need to make and keep all of your accounts current. Negotiate with collection agencies if needed. You'll see a nearly instant increase to your rating.

The little bills mean a lot:

Things have changed, and the ways to improve credit score have changed with them. In the past, the electric company, hospitals, and phone companies of the world didn't always report problems with debtors. This is no longer the case. If you owe some company money, chances are they will report you if you don't pay, or pay late. The days of sending the hospital $20.00 each month are long gone. Paying your little bills is a great way to improve your credit score.

Decrease your debt:

Yes, a reduction in your total debt is one of the ways to improve credit scores and increase your chances of getting a loan. Banks like to look at your total monthly obligations and compare them to your income. Often called debt to income ratio, this is standard for virtually all lenders. You really can improve your credit score this way. Those with the wider gap are more likely to be approved for loans. Total debt can impact your actual number rating as well, so it's important to make the reductions you can. Not only will you improve your credit score, you'll also enjoy having fewer monthly obligations. Negotiating a debt settlement or negotiating with collection agencies are just two of the many ways to increase your rating pretty fast.

Make more money:

Making more money really is one of the ways to improve credit scores. While income isn't the most important factor, it is taken into account. For those looking for loans, the bank will look at your debt to income ratio. Similar to a reduction in debt, the better ratios qualify for the best rates. It's truly a great way to improve credit scores. Consider this: A second job at just $9.00 per hour, working one shift per week, would net an additional $300 or more each month. Increasing your income will have an impact fairly fast.

Don't cut the cards:

In the past, not-in-use revolving account cards (credit cards) were looked at differently. It was once thought that getting rid of them was one of the ways to improve credit scores. Once upon a time, having old accounts with a zero balance would decrease your FICO rating. These days, these types of accounts are looked at in a more favorable light. Essentially, you've resisted the temptation to use the card, even though you could have. At one point, banks considered those with these types of accounts to be a serious risk, a ticking bomb, if you will. Things have changed for now. This is something to track, as these types of things are ever changing. It's one of the many ways to improve credit scores.

Consolidate your debt:

Yes, one of the ways improve credit scores is with another loan. I know this goes against much of what you've read, but hear me out. Taking out a debt consolidation loan will, in most cases, decrease your monthly obligations, and improve your debt to income ratio. For many, a quick boost in rating and the increased disposable income is a combination too good to turn down. Consolidating debt is a great way to improve your credit score. This is how to increase your rating, fast.

Don't apply for all loans:

When you apply for loans, it can have a negative impact, especially when you're denied. If you are looking for ways to improve credit scores, avoid the temptation to apply for loans when you are likely to be denied. Denials, like many other things, are an instant red flag. This only makes sense, so keep it in mind. Using loans properly is one of the many ways to improve credit scores.

Hopefully, you will be able to use some of these methods, the many ways to improve your credit score. The reality is that few things will have immediate results. Generally speaking, it can take months or years to boost your ranking. Using combinations of the methods will yield the best results when you look at how to improve your credit score.



Jul 10, 2010 7:03pm
Great article! Thanks, Jason!
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