5 Smart Moves to Make Your Credit Score Better

5 Smart Moves to Make Your Credit Score Better
CreditScore

5 Smart Moves to Make Your Credit Score Better

If you aren’t getting approved for credit cards or loans and aren’t getting favorable rates for financing, you might need to improve your credit score. Building credit isn’t a particularly quick or simple process, but we have some tips that can help you start and keep improving it along the way.

Pay Your Bills on Time

Paying your bills on time impacts your score more than other factors. Creditors want to be sure that when they extend credit, they will be repaid on time and as agreed. Catch up on past due accounts as soon as possible. Consumers might ignore collection accounts thinking that their credit is already damaged, so why bother. However, in some cases, you can still turn this situation around. Contact the creditor regarding the collection activity. Request that they remove the collection status from the credit report once the account is paid in full. Late payments can be due to forgetfulness, being financially overextended or both. Late payments appear on your credit report regardless of the reason. When you make timely payments, creditors believe you are financially responsible.

Pro tip: Schedule automatic payments from your credit union account to ensure you never miss a payment again.

Fix Your Late Payments

Even closing an account won’t make your late payments disappear. Your best bet here is to get yourself back on the right track – set up payment due date alerts with all your credit cards and loans and get organized. You can move credit card payment due dates around pretty easily on your bank or lender’s website. Be sure to check your payment due dates in relation to your paycheck schedule. Ask your credit card issuer or lender if they can forgive that late payment. Maybe you were out of the country on vacation, or the check got lost in the mail, and you had no idea the bill existed. Credit card companies, in particular, are pretty forgiving if you have a long track record of making on-time payments. Delinquent payments can remain on a credit report for up to seven years from the date of the missed or late payment that the credit bureau reported. This original date is also referred to as the original delinquency date.

Build a Strong Credit Age

If you have a short credit history, there’s not much you can do quickly here to improve your credit. You could try to piggyback on a friend or family member’s credit card if they have a long history of on-time payments. Have them add you as an authorized user. However, you may struggle to find someone willing to do so since they would be responsible for any charges you make. Your other option: Wait it out and don’t close any accounts. A good average age of credit history would be five years and up. The longer your positive credit history is, the better the credit scores may be. For example, a consumer with an average credit history of only one year may only have a reflective credit score in the lower 600’s while someone with over five years of good history will be much higher. Keep in mind that if you have no history at all, it will take an estimated three to six months from the beginning date to see any kind of activity being reported on your credit reports. If you have recently acquired a credit card, you should make small purchases you will be able to pay off by the due date to begin to establish credit and show that you can manage a monthly payment.

Clear Up Any Collection Accounts

Pay off your debt instead of repeatedly transferring it to new accounts. Contact the debt collector listed on your credit report to see if they’d be willing to stop reporting the debt to each major credit bureaus in exchange for full payment. This technically violates some of the collectors’ agreements with the credit bureaus, so that it may be a non-starter, but it never hurts to try. Just be sure to get that promise in writing before you make payment. Also, if it’s a debt that you don’t recognize or seems inaccurate, dispute it with all three credit bureaus. You may get it removed and see your credit score improve quickly.

Limit Credit Applications

The 10% discount for signing up for a store credit card may seem worth it at the moment, but your credit score will take a hit for applying, whether you get approved or not. A hard inquiry will impact your credit score for a full year, though your score will start improving almost immediately after you apply. The hit is small (normally around 3 to 5 points) but if you’re on the edge of two credit score tiers or applying for lots of credit offers in a short time span, you can do a lot of damage. If you find that a hard inquiry was placed on your credit file and you have no knowledge of it, make sure to contact the lender that performed the enquiry to see what it was pertaining to. If it is not accurate or you still have no knowledge of the inquiry, you should expect fraud or identity theft and should promptly alert the credit bureaus of the alleged fraud so that it can be investigated. Doing so may also remove the hard inquiry from your credit report, although it may take some time. Soft inquiries, on the other hand, do not affect your credit score at all and is typically done when a lender is looking to issue you a higher line of credit or someone checks your credit report as part of a background check. A soft inquiry can happen even without your permission, but they will not affect your credit standing in any way.

Don’t waste money on credit repair websites that offer to add you as an authorized user to a stranger’s account. Scoring systems have ways to spot and ignore what they consider to be illicit piggybacking. Just follow these smart moves, and you’ll be sorted.

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