A tarnished credit score can cost you more in interest payments and increase the likelihood of a credit rejection. This can stop mortgage approvals and approvals for a car loan. Fortunately, effective solutions can help improve a bad credit score and make you a desirable candidate for financing.
Control Spending With Credit Cards
The way you use credit cards can either help or hurt your credit score. Using credit cards and then paying off the balance each month helps build a good credit score because debts remain low and you satisfy debts as agreed. On the other hand, carrying high balances and only paying the minimum each month can bring down your score due to high credit utilization. Keeping balances less than 30 percent of the card's limit helps keep a good credit score.
Stop Credit Applications
New applications for credit can further lower an already damaged credit rating. Every application you submit for new credit triggers a credit check or inquiry on your credit report. Inquiries do reduce credit scores, and it takes time to recoup these points. Putting in credit applications unnecessarily can prolong bad credit and slow down efforts to improve your credit. Hold off on new credit until you raise a low score, and then only submit applications if necessary.
Due Dates
Effectively increase a low credit score by simply paying bills on time. Lateness results in additional fees, and if you skip a payment altogether or send in a payment 30 days past the due date, creditors will update your credit file with negative information. Unexpected occurrences may prevent timely payments. Fortunately, some lenders and creditors offer skip payment options or extended due dates to accommodate borrowers. Speak with creditors and ask for assistance to avoid fees and a negative rating.
Report Inaccuracies
Frequently -- at least once a year -- check your credit report with AnnualCreditReport.com and report any inaccuracies or outdated information to your creditors. Ask them to review your account, and then correct mistakes on your report. Removing negative information can help improve a low credit score. You can also dispute errors by contacting the credit bureaus. Addresses of the three bureaus are included with each credit report.
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