Raising you credit score is not as difficult as you may think. It's a well known fact that, people with higher credit scores can easily obtain lower interest rates on mortgages, insurance and credit cards. If your credit score falls under 620 just getting loans and credit cards with reasonable terms is difficult.
According to statistics, there are more than 30 million people in the United States that have credit scores under 620 and if you’re probably wondering what you can do to raise credit score, here are five simple tips that you can use to raise credit score:
1. Pay Your Bills On Time
Your payment history makes up 35% of your total credit score. Your recent payment history will carry much more weight than what happened five years ago.
Missing just one months payment on anything can knock 50 to 100 points off of your credit score.
#1. Paying your bills on time is a single best way to start rebuilding your credit rating and raise credit score for you.
#2. Get a copy of your credit report from the major credit bureaus
Each consumer is entitled to at least one FREE report a year from each of the credit bureau - Experian, Trans Union and Equifax. Obtaining a copy of your credit report is a good idea because if there is something on your report that is incorrect, you will raise credit score once it is removed. Make sure you contact the bureau immediately to remove any incorrect information. It's important to know that each service will give you a different credit score.
2. Pay Down Your Debt
Your credit card issuer reports your outstanding balance once a month to the credit bureaus. It doesn't matter whether you pay off that balance a few days later or whether you carry it from month to month. Credit bureaus don’t distinguish between those who carry a balance on their cards and those who don’t. So by charging less you can raise credit score even if you pay off your credit cards every month. In addition, lenders prefer to see a lot of of room between the amount of debt on your credit cards and your total credit limits. So the more debt you pay off, the wider that gap and the better your credit score.
3. No Need To Close Old Accounts
In the past people were told to close old accounts they weren’t using. But with today's current scoring methods that could actually hurt your credit score. Closing old or paid off credit accounts lowers the total credit available to you and makes any balances you have appear larger in credit score calculations. Closing your oldest accounts can actually shorten the length of your credit history and to a lender it makes you less credit worthy. If you are trying to minimize identity theft and it's worth the peace of mind for you to close your old or paid off accounts, the good news is it will only lower you score a minimal amount. But just by keeping those old accounts open you can raise credit score for you.
4. Avoid Bankruptcy At All Costs
Bankruptcy is the single worst thing that can absolutely destroy your credit score. It will lower your credit score by a minimum of 200 points and it is also very difficult to recover from.
Once your credit score falls below 620, any loan you get will be far more expensive. Bear in mind that a bankruptcy on your credit record can be retained for up to 10 years.
The reality of a bankruptcy is it will limit you to high-interest lenders that will squeeze out high interest rate payments from you for years.
It is better to get credit counseling to help you with your bills and avoid bankruptcy at all costs. By getting credit counseling instead of declaring bankruptcy you can raise credit score over a much shorter period of time.
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