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Fix Your Credit Score

In today's down economy, it is absolutely vital that you give yourself every financial advantage that you can, especially if you have had problems with credit in the past. There is no magic bullet for fixing one's credit score, and you should be wary of the many services that have sprung up promising just that. But there are some very real, and very effective, methods that can raise your score, and help you qualify for loans and credit cards with reasonable rates.

The first thing to do is obtain a copy of your credit report. Thanks to the Fair and Accurate Credit Transactions Act, you are allowed one free copy of your credit report per year. Searching for "free credit report" online yields many sites from which you may order your free credit reports from all three of the credit reporting agencies. Read through your credit reports very carefully, and make note of any inaccuracies. Contact the credit reporting agencies to have these inaccuracies removed, especially if they involve credit limits being reported as lower than they are, negative items that are not yours, or negative items older than seven years. Also make note of your three digit credit score. Generally, the lower your score, the more effective these tips will be at raising it.

Next, you should obviously pay down any balances on your credit cards. This is never easy or fun, but there are very few things more effective than reducing what you owe. If you have been struggling under a heavy debt load, your first instinct upon paying off your cards may be to close the accounts to prevent this from happening again in the future. For the purposes of raising your credit score, however, this would be a mistake. Since lenders look favorably upon those who have access to larger amounts of credit without using it all, leaving your paid-off accounts open is a good move. In fact, if you have an older card that you have not used recently, you may want to make a small charge on it, paying it off in full at the end of the month. That will keep the card active, and make sure that all the credit available to you is reported, which looks favorable to lenders.

Once your debt has been eliminated, start a savings account if you do not have one already. This will let lenders know that you have money in reserve, and speaks well of your ability to repay debts. If you already have a savings account, add to it. Use this money to insure that your bills are paid on time, and that you are current on any other loans you may possess, such as auto loans or your mortgage. Having several different types of credit is appealing to creditors as long as you have been responsible in paying your bills.

Finally, know that lasting change to your credit score takes time. Companies offering to fix your credit instantaneously with no change on your part are scam artists, and will only end up costing you money. Keep a positive outlook, and celebrate your progress. In time, and with perseverance, you can greatly improve your finances.

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