Improve Credit Score

Start The Process Toward an Improved Credit Score

To make sound decisions on the best options open for you, you need to analyze your current credit reports from all three bureaus: Experian, TransUnion and Equifax. This process should be started well in advance before applying for a loan. From six-to-18 months, depending upon how many items you have to address on your reports.

Once you have identified the errors and inaccuracies, you can go through the process of repairing the damage you’ve done or the damage done by outside parties from a messy divorce or identity-theft. Look for the errors most easily fixed to start, such as accounts from others, late payments that were paid on time, debts paid off that are still listed as outstanding, and old debts or negatives that have exceeded the seven-year mandate of the Fair Credit reporting Act. Correcting these inaccuracies will go a long way toward improving the credit score.

Set A Goal Number

Start with a goal, a number that you want to achieve and list the steps of what you need to do to improve your credit status. For example, if your score is in the mid to high 600s, aim for 700-720. The reason? Every point you advance on your score will increase your opportunity to be approved for a loan and will cost you thousands of dollars less during the life of your loan. You never want to go into the arena of sub-prime lenders unless you’re really desperate, because you’ll ay dearly for it. And there are quite a few of these preparatory lenders just waiting to separate your from your hard earned dollars.

Gain Awareness Of Your Habits

If you’ve had difficulty making payments part of the reason may be that you didn’t work within the confides of a budget. A budget is a great tool, no matter how much, or how little, you make.

Set up a spreadsheet with subtotals on all categories and then crunch the numbers of all payments and spending that you‘re doing now. This can be a real shock. Discovering how much you’ve been paying, or committed to paying, is enough to make you commit to change..

Make Your Payments On Time

Set payments that you can afford. Start with minimums on your credit cards and add in fixed payments on auto loans, mortgage or cell phone service plans and the like. Then take the minimums and double them. This may happen anyway this October (2005) when a new law will kick in encouraging credit card issuers to increase the minimum payments they require.

Spread Payments Out Over A Few Cards

Changing your debt-to-credit ratio can lead to an improved credit score. Transfer balances from cards that are nearly maxed out to others with lower balances. Establish credit card balances in a 20-30% range which should increase your debt ratio and score.

You won’t be saving money, unless you transfer to a card with a lower interest rate, because you’ll still need to make increased payments on some cards and reduced payments on others.

Take advantage of those credit card transfer offers that appear in the mail. Check the offers first and don’t apply for new credit alone. You don’t need inquires that will take two years to go away. Use these offers based on “soft” inquiries that don’t count against your score.

Accelerate Your Payment Schedule

Lowered balances are perceived positively. Paying increased amounts on lower payments gives you a little more wiggle room. Then begin making payments immediately after you get the bill. And once you’re able, push these payments even higher. See Credit Payment Push Plans for more information on how to quickly knock down your credit card balances.

Don‘t Close Unused Credit Accounts

Your credit history is an important score factor. Don’t close older accounts because it makes you appear as a new borrower which is not necessarily good. Keep the old accounts open no matter what the interest rates are but keep the balances to a minimum.

Try A Quick Fix

If you need to boost your credit score fast and have minor problems on your credit report such as simple errors or need to pay off account balances, you can hook up with a lender that subscribes to the Rapid Rescoring system. For about $50 a pop, you can clear these negatives within 72 hours by working with that lender. Rapid rescoring will post the new information on your report within that 72-hour time frame instead of the usual 30 days it takes a creditor to report data and the bureau to post it. Considering the amounts you may save in interest alone, this investment may be worth it.

Invest In Tools

Should you wish not to make this investment, Fair Isaac's www.myfico.com offers some online tools you can use to develop strategies that impact your score, including a credit score simulator. You can pick one up when you buy a credit score available from FICO for $14.95.