When it comes to raising your credit score, you can do it for free. You don’t have to pay anyone to tell you the secret or help you on your way. All you need is a few tips and a little time.
Your credit score defines you in the eyes of a lender. It tells the lender how likely it is that you will repay a loan on time. It is a main factor in determining the interest rate you will pay. The higher your score, the lower your rate. The lower your score, the higher your interest and the better chance you have of being turned down.
Most lenders use a system developed by Fair Isaac Corporation. The score is made up of five factors: your payment history, your outstanding debt balance, the length of your credit history, new credit and other smaller factors, such as the mix of credit types in your history.
Scores range between 300-850. If you have a score over 700, most lenders will view you favorably.
Take the time to check your credit score and your credit report. Pull your report from each of the three bureaus: Experian, Equifax and TransUnion. Each reporting agency could have different information on file.
Make sure that each report is completely accurate. Most people will find an error. These errors can be affecting your score. Take steps to correct the error by contacting the reporting lender and the agency.
The best way to raise your credit score is to pay your bills on time. If you don’t, your credit score will suffer. Catch up on any back payments you may have and stay current. As time passes and you show an improved track record, your former late payments will have less impact on your score and report.
Start paying off as much debt as you can. The lower your debt in regards to your available credit, the higher your score. Lenders know that with more debt, you are stretched tighter to pay your bills. Work to get your outstanding debt down to at least 50% of your credit limit. Better yet, pay it all off.
Every time you apply for credit, an inquiry goes on your file. If you have multiple inquiries within a short amount of time, a lender may assume that you are having financial difficulties. Your credit score could be lowered by multiple inquiries as well.
Make sure that you check your credit score and report on at least an annual basis. New information is constantly being added to your report. You want to make sure that everything is correct. Plus, it is nice to watch your score increase over time.
There is no need to pay anyone to fix your credit. They can’t. Only you can take these steps. You can do it for free, it just takes time.