Sometimes your life is all about numbers. If you want to lose weight, you try to get the numbers on the scale to come down. When you were in school, you tried to get your grade point average numbers to go up. Of all the numbers, your credit score may be the most important one attached to you, because that number determines how much you pay for a mortgage, a car loan and credit card interest. Your credit score could even make a difference on whether you get a job. If yours is less than stellar, you can get your numbers up.
Your Credit Report
First, get a copy of your credit report. You can get this free once every 12 months from the big three of the credit-reporting agencies, which are Experian, Equifax and TransUnion. Go through AnnualCreditReport.com, the only source authorized by the federal government. You won’t see your FICO score with free reports, but by reviewing and understanding the information in your report, you can know what you need to work on to boost your score. Another reason to get your report is to check it for errors. These reports can list wrong information about you, which makes your score appear lower than what it should be. Get the agency to correct any error by sending a dispute letter, pointing out the mistake. Send proof, or the agency might think you’re just blowing smoke.
Pay Your Bills
The best thing you can do to increase your score is to pay your bills on time. Payment history counts for 35 percent of your credit score. If you have any accounts that went to collections, and you have a judgment against you, pay it. Doing so will not remove the judgment from your credit report, but a judgment that says “paid in full” is better than one that is outstanding.
Don’t Max Out
Available credit is another area lenders scrutinize that has a big impact on your credit score. Lenders like to see that you do not use up all your available credit. If you are maxed out on your credit cards, or close to it, pay them down. You should only use 30 percent of your available credit per card or less, if you want a good credit score. Don’t cut up any old credit cards for two reasons. One, you want the available credit and two, credit history is another factor in your score. If you cancel the card, you cancel your history.
Develop a budget to help you control your finances. Write down how much you earn and how much you spend. You probably can find areas to cut. Contact your lenders if you are having trouble paying your bills and ask for a modified payment plan, recommends the Federal Trade Commission. Your lender is not obligated to agree to a modified plan, but it doesn’t hurt to ask. Also, ask for a goodwill credit if you were late on a payment one time. Often, lenders will not list the late payment if you ask.
Beware of Scams
Beware of businesses that claim to erase negative information on your credit report. This is a scam. No one can remove correct information from your credit report. Only time can do that. Negative information remains on your report for seven years, or in the case of a bankruptcy, 10 years. Don’t ever follow a credit-repair company’s advice to apply for an employee identification number. The scam is to use the new number as a replacement for your Social Security number to build new credit history for you. This is a felony. If you need help, contact a reputable firm through the National Foundation for Credit Counseling, which focuses on educating consumers.
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