How to Improve Your Credit Score

As of December 2014, credit card debt for Americans has reached $882.6 billion.  Getting back on the road to credit score recovery is a long road that requires patience and perseverance.  Luckily, modern technology has graced us with some tools to get us back on track.  There are many steps to take to improve your credit score. Depending on the severity, it could either take months or in some cases years.

improve your credit score

Over the years, credit cards have been given a bad rap, but in actuality, they can be a help to those who want to establish or reestablish their credit.  The main advantage is when they are used and paid for responsibly, they can boost your credit score.

What’s on Your Credit Report

AnnualCreditReport.com – According to law, we are allow access to a free credit report each year.  Annual Credit Report gives you access to all 3 credit reporting bureaus.  From here you will fill out your personal information.  Then you will be asked some questions that only you would know the answers to.  This is just a precaution to make sure that you are the right person accessing your reports.  After the process is complete, you can access your reports by going to each site.  From here, you can print them out and go over the information or just review it online.

Each credit bureau gives you the chance to dispute anything that doesn’t look right on your report.  Once you have disputed a suspicious item, the company has 30 days to respond to your request.  If they don’t respond, the negative item will automatically be taken off your report.  Removing negative items from your report will improve your credit score.

Set up Arrangement to Pay off Debt

When it comes to improving your credit score, it’s important to get back in the habit of making payments.  Once you’ve taken a lot at your credit report and you see something that you may be able to pay off, try setting up payment arrangements with your creditors.  Payment arrangements can vary based on the company.  Some will request you pay the full amount at a later date, others work on your terms, and some break down the debt into monthly payments. Keep in mind:

  • Don’t let the debt fall too far behind.  Delayed payments cause your credit score to decrease. Don’t be afraid to keep in touch with the credit card company if you are having issues.  Often times it’s our fear that keeps us in debt. When a problem arises and you know you are going to be late, make the phone call.  If it’s too late, sometimes, it is out of their hands at that point.
  • Always remain truthful about your situation.  Believe it or not, some people feel sympathy and will pull strings if they can just to help you out.
  • Never bite off more than you can chew.  If you know an arrangement is too much, don’t accept it.

Ask to Settle

Settlements are a great way to improve your credit score.  When considering contacting a creditor to settle a debt, here are a few things to look at before you pick up the phone or send that email.

  • If you have a debt that is within the statute of limitation and you wish to contact the creditor, never allow them access to your account.  Some creditors will clean out your bank account even if you settled on a different amount. Try using a prepaid debit card to send the payment.  This brings me to my next point.
  • Always get your settlement negotiations in writing.  Sometimes you may get an option to settle in the mail.  If you decide to settle, be sure to keep it for your records.  If you decide to come to the creditor with your settlement, be sure to get something in writing before you send them a payment.

Stay in Control

It is extremely easy to get carried away and make crazy purchases, and then you are left with a bill that you may not be able to pay.  Make small purchases that you know you are able to pay back. When the statement comes, pay the balance in full so that you don’t incur any interest.   Be sure to make the payments consistently for six months before applying for another credit card.  After six months of on time payments, you may consider contacting the creditor about switching over to a traditional credit card if you have a secured line of credit.

Do your best not to become impulsive just because you have a credit card.  It’s time to keep and maintain a good credit score.  Your future is more important than racking up a credit card bill that you can afford to make payments on.  Keep you score high so that you can qualify for great rates on bigger purchases such as homes and cars.  To get more information on improving your credit score, visit the MyFico website.