Here are five things that you can use to raise credit score.
1. Correct obvious mistakes.
Your credit score is what shows up in your credit report. Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan. hanging a mistake on your report can take 30 days to three onths, or more. Get Your credit report from the three major Bureaus: Experian, Trans Union and Equifax.
2. 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 payment on anything can knock 50 to 100 points off of your credit score.
Paying your bills on time is the best way to get started rebuilding your credit rating and raising your credit score.
3. Reduce your credit card balances.
A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. Generally, it’s good to keep your balances at or below 25 percent of your credit card limits.
4. Don’t 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.
5. Avoid Bankruptcy
Bankruptcy is the single worst thing you can do to your credit score. Bankruptcy will lower your credit score by 200 points or more and is very difficult to come back from.
Once your credit score falls below 620, any loan you get will be far more expensive. A bankruptcy on your credit record is reported 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.