The credit score is your business card in the relationship with lenders and credit issuers of any kind. We aim to give you a checklist of five simple tasks to see those numbers skyrocket over 700 or at least move from a good to a very good area. You need to know that the factors that influence your rating the most are your credit history (35%) and your debt to income ratio (30%). Other items such as the length of credit history (15%), the credit mix and new credit are less important. If you really want to make a significant change, work on the first two. Here are three easy steps to raise your credibility.
Ban collection calls
If you feel stressed by calls from debt collectors each day, it’s time you stand your ground and take the first step to fix the situation. Legal provisions are preventing them from calling you anymore if you take your time and write to them. Establishing such a paper trail is also useful later when you will dispute the debt.
If you can make them stop, this will give you some time and peace to think about your problems and get them fixed without additional pressure.
You might be astonished to learn that one in five Americans has at least one error on their FICO score report. While some of these are minor like an address misspell, others could influence the perceived risk level and the ability to get low rates for credit.
The best advice here is to get acquainted with your credit score and cross-check reports from all credit agencies. If you notice significant discrepancies between the numbers be sure to check each item on the report until you find the differences.
Get rid of zombie debt
A specific type of error is the debt that lingers on your credit report although it was paid in full already. Nick-named “zombie debt” this could take a toll on your debt to income ratio. If you are near the limit of 40-50%, having old debt on your report could even prevent you from getting new credit cards or loans.
The only chance you have is to dispute this debt and have it removed. Send a certified letter accompanied by all the documents showing that all the payments, and even penalties, if any, have been paid in full. The lender has 30 days to give you an answer and remove it themselves or if you get no reply within a month, just contact the credit bureau and report as false information.
If you need additional help, you might want to check the Sky Blue Credit Repair review.
Use credit wisely
The best use for credit is to pay recurrent bills. The trick here is to use for this purpose the credit card you have had the longest, since this one also has a history attached, therefore hitting two of the five factors, up to 45% of the FICO.
While you are rebuilding your credit use the plastic for purchases, you would have otherwise paid with cash. This is not the moment to splurge on large and expensive items like home appliances it is important to budget your lifestyle.
Always avoid carrying a balance when you don’t pay the credit card in full. Simply put, this only translates to paying interest on your purchases, therefore more money out of your wallet.
Make sure you don’t spend so much that you push your debt-to-credit ratio towards 50%. Also, resist the temptation to consolidate debt on only one new, low-interest credit card. This move, although seems strategic, can hurt your score by adding up to the percentage of new debt.
In conclusion, get rid of pressure, make sure the debt is really yours and use credit to rebuild your credibility.