There are several steps you can take to improve your credit score. Please keep in mind that a credit score is only a number. If you have outstanding payments, pay off the small payments first and then attack the larger payments.
Your credit score will improve as you pay off the smaller notes.
The debt snowball method is a practical method to pay off your outstanding debts. List your debt from smallest to largest outstanding balance. Pay extra on the smallest bill and then work your way down the list as you pay each bill off.
While you’re working on paying off debt, here are six tips that will help you improve your credit score.
Review Credit Report
First, review your credit report.
The three major credit bureaus are Equifax, Experian and TransUnion.
Credit bureaus use different methods to collect credit information. For example, your credit score at Experian may be different than at TransUnion. Therefore, it is important that you review your credit report.
Pull a free copy of each report every year from AnnualCreditReport.com.
Remove False Information
Next, inaccurate information is commonly found in credit bureau reports. It’s estimated that up to 1 in 5 people have an error on at least one credit report. While most errors are minor and won’t impact your credit score, incorrect reporting or fraudulent activities can be a major inconvenience and should be cleaned up.
If you find errors in your credit report, contact the credit reporting agency. Each agency has a process to dispute errors on their websites.
Knock Out Payments
Paying off debt will do wonders to help you improve your credit score. It is important that you knock out payments as soon as possible.
Lenders use several methods to evaluate a credit score. For example, if the lender runs a credit check and sees that you owe 15 different companies, it will impact your credit score. The best approach is to pay off all consumer debt as quickly as possible.
Make Payments On-Time
The best way to improve your credit score is to make payments on time. Late payments will cost you a lot of money in the long run, and lower your credit score. Some companies will report you to a credit agency after you are 30 days late.
If you do fall behind, contact the lender and explain your situation. The lender might not report the late payment to the credit agency.
Avoid Identity Theft
Identity theft is a big problem. It is up to consumers to protect their identity. If your identity is stolen, your credit rating can be temporarily impacted. Work with the credit reporting agencies to identify all fraudulent accounts and report the illegal activity to your local authorities.
While you won’t be held liable for any fraudulent charges, be vigilant about ensuring the fraudulent account have been removed from your credit report.
Regularly check your credit report to ensure the bogus accounts aren’t added to your credit report in the future.
Avoid Frequent Inquiries
Avoid applying for loans and credit cards frequently. Each time you apply, lenders note the inquiry on your credit report. High levels of this activities is a red flag.
If you have a large amount of inquiries in a short period of time, you are considered a high risk. Keep in mind that auto loans, mortgages and student loans are scored differently. Anytime you apply for credit, it will affect your credit score.
Improving your credit score is possible, but it takes time. Find more tips on how to improve your credit score at MyFico.com – the Fair Isaac Corporation’s website. NCC Direct, Inc. can also be a great resource for you when it comes to improving your credit score.