Knowing the various methods to improve your present credit situation can make you a good candidate for a low-rate auto loan, mortgage or credit card. Credit is imperative, and people with low or bad credit scores tend to receive more credit rejections than someone who shows creditworthy habits. Fix your credit now, and open the door to numerous financing opportunities.
Lateness and Payments
Solve credit problems with better payment habits. Your payment record influences your credit score, and building a stronger credit history starts with timely payments to your mortgage lender, auto loan lender, credit card company and other creditors. According to My FICO, timely payments make up 35 percent of personal credit ratings. Each payment received by the due date slowly increases your credit score. Stop late payments altogether, and you could significantly increase your FICO score.
Eliminate Balances
Another effective move to bolster a weak credit score includes paying down balances on credit cards. Credit scores factor in how much you owe, or your debt ratio. The less debt you carry, the better. MSN Money recommends paying down credit card balances to below 30 percent of the credit limit to help fix a low score. Getting rid of debt is often a slow process. But with increased monthly payments and limited credit card use, you can reduce the amount you owe and improve your credit.
Credit Reports and Accuracy
Outdated or completely inaccurate information on your credit file can bring down your FICO score. Avert problems when applying for loans and credit by regularly checking your credit report -- at least once a year. Annual Credit Report issues free reports to each consumer on an annual basis. Order reports online, and check the document to ensure the correctness of information. Dispute inaccuracies online or write your creditors.
Deleting Negative Information
Certain negative information can remain on credit reports for seven years. This includes collection accounts, credit judgments and charged-off accounts. Negative information on reports eventually age and fall off. But you can expedite the deletion of this information by negotiating the removal of negative items upon satisfying the debt. Contact creditors or collection agencies to see if this is an option. If so, schedule a plan to submit payments to pay off the old debt.
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