Fixing your credit helps you get new credit with few hassles, and a good credit history is often required for mortgage loans. Several tips can help improve your present score. The highest credit score is 850. You can achieve an excellent score with smart credit habits.
Credit Utilization
High credit card utilization, which refers to carrying high balances on your cards, will hurt your personal FICO score. Credit is available to make purchases when in a bind. But relying on credit or lack of self-control can cause balances to increase. And if unable to manage these debts, your credit score will suffer. A low credit card utilization involves charging less than 30 percent of the credit limit. For example, a credit card with a $1,000 credit should have a balance no higher than $300.
Late Payments
Losing a job and having financial issues can trigger missed or late payments. Payment history makes up 35 percent of credit scores; therefore, it's imperative to avoid lateness and delinquencies. Plus, creditors and lenders charge a late fee for missing your due date, which can slowly increase the balance on credit cards. Do everything possible to pay by your due date, even if this means only paying the minimum. When this isn't possible, discuss repayment options with your creditor to avoid penalty. They may waive the payment for the month or extend the due date.
Rebuilding Credit History
Serious credit issues may call for completely rebuilding your credit from scratch. This can hold true after a bankruptcy or after having bills and other debts charged off or turned over to collections. Negative items of this nature stay on your personal credit report for seven to 10 years. But in the meantime, you can take steps to gradually improve your credit rating. Start with a secured credit card from a bank or a bad credit auto loan. Secured cards require a deposit, and bad credit loans have higher finance rates. While the terms aren't the best, managing these accounts with timely payments can add points to your score each month.
Credit Report
Clear up mistakes on your credit report and help fix your credit score. Mistakes don't occur on every credit report, but one major negative item reported in error can cause your personal score to drop. Order online from Annual Credit Report and view all three of your reports within minutes. This is a free service that every consumer can take advantage of yearly. What's more, Annual Credit Report places a clickable link on the website for disputing erroneous items.
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