Building credit score takes time and patience. Higher the score, lower the rates you’ll be charged when getting a credit card or borrowing money to buy a car or a house. Let’s say your current score is 640 which is fair but getting over 750 would make your score excellent therefore getting the best available rates in the market.
Stay Below 50% of Your Available Credit Limit
If you have one credit card with $500 limit and another with $2,000 your total available credit limit is $2,500. Being at 90% of your total credit limit will push your credit score lower. Make aggressive pay downs to your card balances to keep it at 50% or lower of the available limit. You can also ask the credit card company to increase your limit. Pay down highest balance credit cards first. Consolidate credit card debt with companies such as Lending Club or Kabbage.
Credit card companies report to Equifax, Transunion and Experian every month. As soon as your creditor reports your lower balance, the better utilization will be reflected in your scores.
Paying down or paying off your credit card debt can increase your scores by nearly 110 points, says John Ulzheimer, a credit score expert who has worked at FICO and Equifax.
Make Payments on Time
Making your financial obligations’ payments on time is critically important in order to have a high score. Creditors will report 30 days late payments to credit bureaus. If this happens, call the creditor immediately. Arrange a payment plan and ask if it will rescind the reported delinquency so it no longer appears on your reports. Even if creditor refuses to rescind the delinquency make sure the bring the account to current status.
Late payments will show up on your credit report for seven years. There is no fast way to wipe out your missed payments. Focus on paying every bill on time so you don’t end up in delinquent situation.
Credit Report Errors
Credit reports have errors and about 5% of consumers are affected by it. There are estimated 33,031 John Smith‘s in the US and if you have this name or another common name the chances are your credit report data could have been mixed up with somebody else’s. About 1 in 4 reports contain errors that might have at least a small negative effect on scores. Dispute those errors with every bureau The response will be provided within 30 business days and once incorrect negative information comes off your reports, your scores should improve. Keep an eye on your credit reports annually by requesting one free credit report every year from Annual Credit Report.