Your credit score is calculated using a formula created by the Fair Isaac Corporation using information found on your credit report. Your score takes into account your payment history, the different types of credit you have used, the amounts you owe, the length of your credit history and how much new credit you have recently applied for. Many companies offer to fix your credit score so that you can get loans or the preferred interest rates. However, you can improve your score on your own.
Check Your Credit Report
Your credit score is based on information in your credit report so if your credit report contains errors your score will be negatively affected. Each year you should order your free credit report. Even though it will not give your credit score, you can see any negative information that might harm your score. If there are errors, locate evidence that you have such as statements that you can use to prove your case. When disputing a claim, write down everything you do and everyone you talk to. Though you are unlikely to end up filing a lawsuit, keep in mind that should your case get that far every step you have taken will be scrutinized so you should be careful to keep a professional tone. Once the credit bureau receives your dispute, they must investigate within a month so you will generally know the results within two months.
Speak with Creditors
If for some reason you cannot even make the monthly payment when it is due, you should alert your creditor to this and see if the company can help you by changing your payment schedule. Many companies would prefer to change the schedule rather than having to send a collections agency after you because of the fees collections agencies charge. Your credit score will be spared a large drop of you can avoid having your account be sent to collections. In addition, if you have had a fairly good relationship with one of your creditors, consider asking if they would be willing to remove a delinquency from your record.
Make a Budget
Making a budget and sticking to it will help you make payments on time and pay down your debt. Your payment history accounts for 35 percent of your credit score so by making sure your accounts are current you will be repairing your credit. When you have a budget, you are better able to see where you spend your money and how you can minimize your costs to pay off your debt more quickly. When budgeting for debt payments, identify the account that is charging the most interest. Make only the minimum payments on your other accounts and devote as much money as possible to paying off the account with the highest interest rate first.
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