You must be aware of the fact that credit score is based on analysis of your credit history. It denotes credit reputation of a person. It is important to maintain a flawless credit score because it helps a creditor decide whether to give you credit or not. In case, you have a bad credit history, your loan application will be rejected. But don’t worry if your credit history is spotted; you can take a few steps and make it blemish free. It will take some time, but it is not impossible.
Watch out your credit report
Your credit report is maintained by three agencies, TransUnion, Equifax and Experian. From these reports you can get an idea of your accounts that are putting a negative impact on your credit score. It’s better you ask for a three in one report that carries scores from all three bureaus. This is helpful in comparing scores. It is necessary to compare the scores because a difference of 40 points; if the difference is more than that you may have to pay higher interest rates or may even face denial of credit. You should workout to clear discrepancies between the 3 scores.
Not only may this, reading your credit report helps out in spotting errors. If you detect your credit report to be erroneous, you should report to a credit bureau or the person that maintains your credits. A wrong entry putting a negative impact on your score is capable of bringing down your score by 60-100 points.
Clear your debts timely
History of your payments makes a considerable contribution to your credit score. If you have not paid your debts, you can be sure that you are being watched. More pending payments mean more negative points in your credit history. If there is any unpaid credit card balance, clear it quickly before the details are sent to a collection agency. This is significant because untimely and missed payment show up on your credit report. And your account is referred to a collection agency that harms your credit score considerably.
Seek aid from professionals or creditors
If you are facing any financial hardships, talk to your creditors and ask for some leniency for sometime till you are on your feet again. If you are swept over by your credentials, you can look for professional help from resources like Consumer Credit counseling. You can locate such a counseling agency from the National Foundation for Credit Counseling or your credit card bill that bears a number of these agencies.
The two P’s
Patience and perseverance, the two P’s are two tools, not for calculating your credit score but surely they help in amelioration of these scores. This is because the damage to your credit score did not occur in a day; it took a long time and will certainly take some time to show the improvements. Moreover, you can also seek guidance of Your Personal Financial Mentor to improve your credit score. He will devise a strategy for you by keeping your financial goals and objectives in mind.
Do’s and Do not’s
- You should be aware of what puts a negative and positive impact on your credit score. Here are some Ps and Qs that you should take care of.
- A long credit history leaves a good impression and boosts your credit score, so don’t close an old account
- If your account is mentioned to a collection agency or you have been declared bankrupt, this will bring down your scores. So be regular in your payments.
- Keep your debts below 50% of your credit limit. If you owe amount close to your credit limit, it’s going to pose a damaging effect on your credit score.
- The next thing you should take care of is your new accounts. If you have too many new accounts or applied for new credit cards, consequences are not going to be good for your credit report.
- Avoid one type of credits, this harms your credit score; but mixed credits, i.e. loans, and credit cards ameliorate your credit score.