Improve Your Credit Score

Are you getting bombarded by "sorry you were declined" and then sky rocketed interest rates on the things you do get approved for? Well, if so you need to evaluate your credit. Your credit is the most important thing when it comes to finances. By improving your credit you will not only save money but, get more of the things you want in the future. Here are a few things you can do to improve your credit.

What is your credit score?

First and foremost find out what your credit score is. You will need to know your score in order to improve it. Check out www.anualcreditreport.com for your credit score. They allow you one free credit report a year from all three major credit bureaus: Equifax, Experian, and TransUnion. Look at your credit scores from all three credit bureaus. They will most likely vary within a few points but, this is normal because the same credit information is not always submitted to all three companies.

Clean it up!

Check to see how many delinquencies you have. If there is anything that should not be on there, contact that credit company immediately to get it resolved. If that does not help submit disputes to the credit bureaus in order to get it evaluated and determine whether or not it belongs on there. In the event that you have multiple outstanding accounts, start one at the time and continue paying them off until you no longer have any. I would recommend beginning with the most recent and paying it off first. If you can't afford to pay the whole bill at once there are a few options to getting it paid in order to improve your credit.

The majority of the time, if you contact the collection agency that has filed a claim against you they will allow you to set up an installment plan to pay the over due account. Sometimes it's only for two to three months and sometimes longer depending on the agency and the amount of the delinquency.

Another option is to 'settle' the account. For instance, if you have an outstanding Sprint bill for $250 that has been turned over to collections the credit agencies may settle with you for $125-$150. There is a trick to settling with credit agencies! Don't take the first offer. They will expect you to pay the full amount. Tell them that you just can't afford it. They will usually lower it about $30-$50 depending on the amount of the bill. Continue to tell them "aw gee, that's still too high! I was hoping that I could this today but I just can't afford that!" When they ask you how much you can pay give them a ridiculously low offer like $100. They will either accept it or go up a few dollars which will make it a lot lower then the original $250, making it easier to pay it off and improve your credit.

What you should know about settling!

One thing to know about improving your credit by settling is that it's not the best thing to do. It does help improve your credit and show companies that you did "settle" out, but it also shows them that you didn't pay the full amount that you owed. While settling does help to improve your credit it's not as helpful as actually paying the whole debt. Sometimes you have to settle if you can't afford to pay the whole amount. That should be the only time you go for settling out. Settling really helps if you have a huge debt for a few thousand. After all, something is better then nothing!

Don't be late!

When trying to improve your credit or maintain your credit, the worse thing you can do is be late. Every time you are 30 days late a mark goes on your credit. Be sure to pay all of your bills on time. Each late payment of 30, 60, 90, 120,160 days will continue to show on your credit until it that account has been closed out and falls off after the seven year mark. You can improve your credit and raise your score by simply making sure every payment is made on time. If you have had several late payments before but, continue to pay them on time for at least six months you will begin to see your credit score improve.

If you don't have to have it, don't ask for it!

Every time you run your credit your credit score is drops a few points. While it doesn't stay on your credit but for two years it can make a big difference in the mean time. Every time you sign up to get a new cell phone, a new credit card, a department store card like Wal-Mart or Lowes, you are lowering your credit. A creditor will look at your credit score and see every time you inquired for a new line of credit regardless of the reason.

If you go to three dealerships looking for a new car and submit and application for a loan you can expect about fifteen hits on your credit! Dealerships don't tell you but, when they run your credit for a loan they run it an average of five times. Depending on your interest rate offers, they may run it more than that. The best thing to do is to shop around and then go to the final dealership of your choice and submit your application only once. Going to a bank or credit union will also help to reduce the number of hits and sometimes offers lower rates.

Same thing goes for buying a house! If you run from one mortgage broker to the next they will each run your credit multiple times in order to find you the lowest interest rate. In the long run, continuing to do so will severely lower your credit score due to all the inquiries.

More is less when it comes to your credit!

When it comes to credit more, often means less. The more accounts you have open the more you will lower your score. Five open accounts can lower your score by an average of 10 points. Though, paying on time will help to boost your score in other certain area's it will also hurt you if you have too many open accounts. It's called Potential Debt. Creditors look at it and see that you could easily become trapped by higher payments which could cause you to lapse on making your payments to them!

Just say no!

Credit companies send out millions of credit approvals in the mail every day! Just because they sent you one doesn't mean you should accept it. Accepting it will not only open another account, but will be another hit on your credit. Be sure to shred all papers or documents that have such approvals on them or else you may find your self with some fraudulent charges if someone else was to get their hands on it.

Minimize and prioritize!

Start with your credit card that has the highest interest rate. Give that account a higher priority for pay off. Pay that card off and close it out! Think about it- do you really need six credit cards? Pay every payment on time for each card and if possible, add as much as you can spare to the account with the highest interest rate. This will not only help you to pay it off sooner and improve your credit score, but will also help you to save more money by paying less interest.

Once you have paid the majority of your cards, keep only the once that you must have. Most people like to have one credit card on hand just incase of emergencies. That's fine but you must minimize your current credit card collection in order to help improve your collections. Having to many credit cards buts you back at the beginning of the credit circle with having too many open accounts and a high potential for debt.

You have to have credit to get credit!

While you shouldn't go to every credit lender attempting to get credit to improve your score, you should a have a few lines of credit open and active. This can include your everyday finances such as mortgages, auto loans, a furniture store account and a credit card or two. As long as you are paying your payments on time, this will help to improve your credit score. It will show that you can manage your bills and pay them on time!

Maintain your credit!

Improving your credit isn't worth the time if you don't plan on maintaining. Being late on your payments, opening new accounts, and applying for multiple credit accounts can lower your credit score by a few hundred points in as little as one month! Once you have improved your credit keep it there. The average credit score is in the mid 700's and is a quite high. Not only will you feel better about your finances you will see a huge saving with lower interest rates.

Once you start making changes and improving your credit score, allow at least 30-90 days to see it take effect. You credit score is updated every 30 days and sometimes may take longer depending on the credit bureau and reporting agencies. Improving your credit will not happen over night unless you win the lottery and pay everything off in one day! Even then you will have to wait a while for it to update along with your negative accounts to fall off. It takes time, patience, and money to improve your credit score but in the end it will make a huge difference!