Creditworthiness is crucial to obtaining home and auto loans, as well as receiving decent rates on insurance. It is important to have a decent score and to do this, some modifications may need to take place. If your credit report is spotty, there are a few things you can do to improve it.
Examine Credit Report
Get a copy of your report from all three major credit bureaus: Experian, TransUnion, and Equifax. Look carefully at all three reports to determine where your score needs to be improved. If your debt-to-income ratio is too high, you need to attempt to lower it. If you owe a significant debt and your line of credit is almost maxed out, this will lower your score. Pay down these debts as soon as possible to see a quick increase in your score.
Be sure that all credit accounts listed are yours. Sometimes mistakes happen and you should dispute them immediately if they occur. If erroneous information is sent to a bureau or it is entered under an incorrect social security number, you may suffer the consequences. Contact the credit bureau immediately to file a dispute. You will have to send them a detailed letter explaining what the error is and why it should not be on your report. Also, contact the source of the error. Find out why they reported you to the bureaus if you feel that the reason is false.
Debt Consolidation
There are many companies that can help you manage your debt by combining all of your debts into one low monthly payment. This works out well for those with a lot of debts that are accruing late charges, interest charges, and other penalties due to an inability to pay. A legitimate credit consolidation agency will work on your behalf with your creditors to help reduce your payments to something you can afford. Many of these agencies are partially funded by creditors, so they are usually willing to work with debtors who use this type of assistance. As long as you are making an effort to pay off your debts, most creditors will make note of this on your report and will not continue listing you as delinquent.
Remember, there are plenty of agencies that claim to help you with your credit score but they are not legitimate. Do your research online before choosing an agency because this can save you a lot of money and frustration. They should be registered and in good standing with the Better Business Bureau. If they are not, do not use them. Read as many testimonials as you can when researching a debt consolidation agency. If others view an agency positively, it may be a good operation.
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