Your credit score is a good indicator of your financial situation. Many mortgage brokers, loan officers and credit card companies gauge your credit worthiness based on your credit score. The three credit reporting agencies (Experian, Equifax and TransUnion) look at your credit history and based on many factors, determine your credit rating. A high score gets you any loan you want at attractive interest rates, while a low score deems you to be a credit risk for which you will pay higher interest rates. But there are a few things you can do to improve your credit score.
Contact All Three Credit Reporting Agencies
One of the quickest ways to improve your score is to remove any mistakes or errors from your credit report. Every year you can get a free copy of your credit files from Experian, Equifax and TransUnion just by calling them or filing out an online form. People make mistakes with your credit files all the time. Also, with identity theft on the rise, it is also a good idea to check your credit files annually.
After receiving a free copy of your file, look over every item carefully. If there are accounts that you are not aware of or accounts that were closed or paid off and the file does not reflect this, contact the credit agency and explain why you think there is an error. The agency is legally required to investigate all claims and to remove inaccurate items from your file. By eliminating errors from you credit file, your credit score can increase within a few weeks. This is probably the best way to increase your credit score quickly.
Use a Credit Counselor
Some nonprofit credit counselors offer assistance in improving your credit score. This is not debt consolidation. Credit counselors look over your bills, budget, and income and try to find ways to make your bills more manageable. There may be things you can do to lower your monthly payments or your interest rates that you are not aware of. The credit counselor works on your behalf with any creditor to make payment arrangement or to reduce an outstanding bill. Any of these methods, if used properly, raise your credit score. Good credit counselors are legitimate companies with good reputations.
Pay Off Your Bills Quickly
It is easier said than done, but one of the best ways to improve your credit score in a short amount of time is to pay off more of your bills. By lowering your debt, you are seen as someone who is financially responsible. Pay off as much of your bills as you can. Even adding just $10 to each bill each month can help. It is also a good idea not to apply for more loans if you want to improve your score. Too many inquiries into your credit history lowers your rating. Also avoid debt consolidation; it doesn't help in getting a higher credit score. It is best to have your debts spread out over several accounts instead of having one big account. Credit agencies look at the ratio of money owed to number of accounts. Moving balances from one card to another can also lower your score. It is better to work with a credit counselor to negotiate a lower interest rate. This will help to pay off each bill faster. And this can increase your credit score.
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