Thursday, March 22, 2012, AM | 1 Comment
Your credit score is the most important item in your personal finances that may need to improve for getting loan on favorable terms. If you have good credit such as close to 800 or better, you can easily get credit for bigger amount and with a lot less interest rate. There are ways to improve your credit score. Some are definitely easy that anyone can do but for other folks they might be the hardest to follow.
A lot has been written on this topic. Consider this post as a reminder of the different steps that you can take to improve on getting credit you may want. FICO is one big source where your credit score is calculated and kept.
If you have ever applied for a credit card, mortgage or student loan or insurance, rest assured that a file of your personal finance history has been created. This file is known as your credit report.
The credit report file has every information you can think of about you – your current and previous addresses, how you have paid your bills, have filed for bankruptcy. It might have information about whether you have been sued or arrested.
Get a load of this…
One way to make money, Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that have a legitimate need for it. They use the information to evaluate your applications for a loan, insurance, employment, a lease, or whatever.
Your job, should you decide to accept it…
Your job is to keep your credit score at high enough level – close to 800 – so that whenever you need it, loan and other goodies are readily available to you and at the most possible favorable terms.
If you have lower credit score, for example 600 and below, here are steps you can take to improve on it.
Get your free credit reports
This should be your first step to take on the big journey of improving your credit score and thereby your credit report. Once you get your credit report, examine it, analyze your financial situation and start working on your objective.
Pay your bills before due date
After examining your credit report, you may find that you have bad credit score because you didn’t pay your bills on time. If you cannot pay the bill in full before the due date, then make payment (minimum plus more as much as you can) before the due date. That way you would at least avoid late charges and hopefully finance charges as well.
Understand how FICO credit score works
Once you start paying bills on time, gradually but surely you will see some improvement in your credit score. It takes time. To succeed, you must be organized and stick to you schedule. However, you should understand how FICO credit score works so that you can take more effective and efficient steps towards your objective.
Correct errors in your credit report
If you believe there are errors in your credit report, make sure you call the responsible parties and try to correct them especially if those mistakes are not due to your own making.
Beware of credit-repair scams
You must have seen advertisements in media by companies that promise to erase accurate negative information in your credit report in exchange for a fee. They cannot do it. Only you can by slowly and gradually – it takes time – taking the steps to improve on your credit report.
In a Nutshell
Only you can improve on your credit score. Anyone else promising to you otherwise is lying to you. Don’t waste your money. Don’t believe these claims. They are very likely signs of a scam.