Credit Score Makeover Series, Part 2: 6 Ways to Improve Your Credit Score

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Last week we talked about ways to makeover your credit! You learned the sooner you start the better. So, read on to get additional tips to makeover your credit score. Continue to take steps toward starting the New Year off right when it comes to your credit by using these additional tips as well as the tips from last week to help increase your score over the next year! If you missed Part 1 of the series, which includes tips 1-6, you can review Part 1 here:
7. Avoid paying for everything with a debit card. The type of credit and finance history contributes to 10% of your credit score. The use of debit cards will not build up or improve your credit history, because their use is not reported or reflected on your credit report. Debit cards are useful, but avoid paying for everything with a debit card if you want to either build up your credit or improve your credit score. Therefore, one of the most effective ways to improve your score in this area is by using a credit card responsibly to build up or improve your credit score. In addition, avoid getting a loan or opening new accounts with a finance company or payday lenders. A finance company account on your credit report could bring down your credit score because their interest rates are much higher than the rates at the local bank or credit union. As a result, the terms are typically less favorable, which may increase your risk for default. Unfortunately, using a finance company is weighed as a higher credit risk, and may negatively impact your credit score.
8. Avoid going over the credit limit. Borrowers with a lower credit utilization or debt to limit ratio tend to have a good credit history, and is associated with being a lower credit risk. The larger the contrast between the original loan amount and your current balance, the better your credit score. When your credit card balance is over the limit, then you credit utilization is above 100 percent, and is associated with being a higher credit risk. Fortunately, running up your credit card balance isn’t usually reported to the credit bureaus, if you are able to pay down the balance before the billing date listed on the statement. However, going over the credit limit increases your credit utilization and lowers your credit score, and a lower credit score leads to less than desirable financing. So, work towards maintaining a lower credit utilization, and avoid going over the credit limit.
9. Avoid co-signing for anyone. Credit cards or loans you’ve co-signed for are listed on your credit report and impacts your credit score. If your friend misses a payment or simply decides to stop making the payments, your credit is affected as if the loan or credit card debts were yours. So, avoid co-signing for anyone. If you have already co-signed for a friend make sure they make the payments on time each month, or at the very least let you know if they are struggling to make the payments as scheduled. You may find it necessary to make up any missing payments, and then work with them to get financing in just their name.
10. Pay off delinquent accounts. Paying off delinquent accounts that are less than 7 years old will improve your credit score. After 7 years, the delinquent debt should drop off your credit report. If you make a payment on a delinquent account that is more than 7 years old, the creditor may restart collection activity or legal action. If you’re determined to pay on a debt more than 7 years old, then pay it off. However, please think twice about making payments. Paying off the more recent collection accounts will improve your credit score, and will certainly improve it more than paying off an older delinquent account first.
11. Consider rapid rescoring to quickly recalculate your credit score. If you did not qualify for a mortgage as a result of inaccurate information, then repaid rescoring may be the difference between an approved mortgage loan and a declined loan. Typically, your credit report is updated within 30 days to show that the balance is paid in full. If not, you can dispute the item, and credit bureaus are then obligated to review the matter. Providing proof that a debt is paid in full or proof that an error was made will help to speed up the review. Otherwise the resolution of your dispute could take months versus weeks to update and reflect a positive change to your credit score. Once the recalculation is complete, it often results in a higher credit score, and is often done in 5 to 7 business days. This service is only offered to mortgage lenders and there is a fee associated with this service.
12. Please keep in mind that you are welcome to schedule a free counseling session with a certified financial services specialist (credit counselors). If you are having problems making your credit card payment each month, our certified counselors will assist you in managing your budget and your household expenses. Counselors understand the anxiety associated with your financial concerns. Most clients leave the appointment with an action plan and the confidence to improve their financial health. Often, a comprehensive counseling session, which includes a review of your budget, and a realistic action plan is offered free of charge in the office, over the phone, or online. Credit counselors can assist with this and can also assist in lowering the interest rate. Call 1-800-355-2227 or visit us online at to discuss your financial concerns, and move one step closer to economic security. The decisions you make today, may affect your ability to get credit in the future.
If you follow most of these 12 tips, you will not only improve your credit score, but they may help you potentially save hundreds or even thousands during the life of your loan or credit card debt. Please like and share this post, and visit us online at to view other useful blogs.

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