If you have been late on some payments, your credit score may have declined. If this is the case, take a look at some of these tips to help regain that credit score you have worked hard to get. If followed correctly, you may be able to get back to your old credit score; in fact, you may even be able to raise it even more.
Pay Your Bills
The number one cause of a declining credit score is late or unpaid payments. In order to begin improving your credit score, you need to make sure you pay all of your bills on time from now on. Also, if you have had a late payment many months ago, it is important to keep paying on time from no on because as late payments become more distant in the past, it will not have as much of an impact as a late payment last month. This is only the case if you aren’t late anymore, now or in the future.
Improve Your Credit Score One Step at a Time
Here are a few ways to improve your credit score efficiently.
Take it easy on buying on credit-
To start improving your credit score try not to accept new loans, especially if you have recently taken on a new loan. This is because when calculating your credit score, older debt is looked at in favor while newer debt isn’t looked at brightly. Doing this can help you in several ways. For example, when you apply for credit, the lender will look at your credit score which shows a credit inquiry. So, if you apply for several loans very quickly, it could have a negative effect on the way the lenders look at you. If you don’t apply for credit, then no new inquires. In addition, if you have been late in the past and then you take on a new loan, your credit score will automatically decline.
Try to get rid of small balances-
This is important because another factor when calculating credit report is that of how many outstanding loans you currently have. The less outstanding loans you have, the better your credit will tend to be. By this logic, it would be wise to pay off some of the smaller loans. This is a great way to begin improving your credit score. It is effective and can be done quickly.
Begin putting money into your debts-
This could possibly be one of the biggest ways in which to improve your credit score. Credit Utilization is the percentage of how much debt you owe and how much debt you are allowed to have. For example, if you have a credit limit of $10,000 and you have $5,000 outstanding debt, your credit utilization is 50%. The higher the credit utilization the worse it looks on your score. The lower, the better. In general, anything above 80% is considered bad, anything under is better to have. In order to get these percentages down, you can begin paying off these outstanding debts. Currently, credit utilization is used to forecast debtor default which is why it is so important to get that CU down to start improving your credit score.
Check your Credit Report Often
Every year, at least once or twice, take a look at your credit report and check for any errors that may be impacting your report negatively. One of the more common mistakes is sometimes there will be loans in your report that aren’t even yours. Of course you would need to contact the lender and tell them of this mistake but make sure you have proof. After it has been corrected, have it removed from your report and have the lender create a confirmation of some sort in order to prove that this has happened and it was an error from the lender. This is especially important because you can use this confirmation to report to other lenders just in case the lender that made the mistake doesn’t make time to do it.
Improve Your Credit Score by Getting Rid of Past Dues
If you haven’t already done so, it is very important to get rid of any past due bills. Whether they are three years ago or further, they will have a negative impact on your report. Pay these debts off and receive written evidence from the lender in which you have paid off and send that evidence to other lenders to show you have paid off some debt. Do not overlook these old debts; in fact, these may be easier to pay off because it is often the case that these are not very expensive; otherwise the company may have come after you already!
If you sincerely follow these tips, your credit score can soon become your friend once again, rather than your enemy.