3 Things To Help You Improve Your Credit
The importance of a good credit score is apparent to many of us. With a good credit score, you increase your chances of getting better terms on the next credit card or loan. As such, it makes sense to take concerted steps to improve your credit score, even when you have a reasonably strong score. After all, there is always room for improvement.
While there are obvious tips that we are all familiar with, there are useful tips that most of us do not take advantage of when improving our credit reports. For instance, you might pay your electricity and gas bills on time and keep the level of revolving debt low, but that is not the end of your credit improvement endeavor. You can still bolster your score further.
Herein we will explore the top 3 tips to improve your credit, even when you have a reasonably good score.
#1. Dispute Any Inaccuracies In Your Credit Report
There is no fool-proof system in the credit reporting industry. Errors do happen, and they can have a significant negative impact on your report. As such, you need to dispute any inaccuracies you find on your credit report.
Review your credit report, keep an eye on the following:
- Inclusion of accounts that are not yours (or you are no longer associated with, for instance, joint accounts after a divorce),
- Social Security numbers and names that are not yours,
- Addresses of places you have never lived,
- Accounts with inaccurate or wrong credit limits and date listed,
- Negative information, such as late payments older than seven years.
You need to do this for all three reporting agencies. While it might seem like tedious work, it is essential, nonetheless. A Federal Trade Commission study conducted in 2012 found that at least 1 in every 5 consumers had an error on 1 of their 3 reports, at the very least. Given the fact that your credit report is based on the information the reporting agencies have on record, it is of utmost importance that the information is always accurate.
To this end, you can use your annual free copy of your credit report to check for errors. Importantly, when you come across errors, you need to dispute the inaccuracies or wrong information. You should contact each reporting agency separately, and you need to lodge a separate dispute for every error you have identified. Contact the reporting agencies with copies of the right information.
In the same vein, when you find accounts that are not yours and suspect you are a victim of identity theft, you need to close those accounts, place a fraud alert on the credit reports, file a police report, and file a complaint with the FTC.
#2. Track Your Credit Utilization Rate
Credit utilization rate is a category in all the credit agencies’ scoring systems. As such, you should make a point of ensuring your balances stay at a healthy level relative to your credit limit. In doing so, you will avoid the practice of using too much of your available credit, which is considered a risky practice.
Typically, the higher the ratio, the lower the score in this category. Ultimately, a high ratio will lower your overall score. While some agencies consider 30% as the optimal rate, other agencies use 10%. This is something to keep in mind, and if you want a good score on all three agencies, consider keeping your balance at or below 10%.
Additionally, you should consider keeping old unused cards open, if you do not incur annual fees. This is because when you close the account, you might increase your credit utilization ratio, since it might result in you owing a similar amount but on fewer accounts.
#3. Retain Old Debts Reports On Report If They Are Positive
If you are have been paying your auto or student loan on time, you do not have wipe such debt from your report after you complete paying the debt. In some instances, these debt records can help improve your credit report. Likewise, having a credit card account with a positive history will help your credit score. As such, do not be too hasty to close down positive accounts as they are valuable to your credit score.
By following these three tips, you can improve your credit over time. Improving your credit report does not have to wait any longer; you can start today, take steps to follow our top 3 tips for credit improvement.
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