Have you had problems paying your bills on time lately?
The fact of the matter is that you are not alone. More than 30 Million people in the U.S. have the same problems as you. Poor credit can be the primary cause for a severe inability to obtain credit cards and/or loans.
There is a solution to this problem and it is right at your finger tips.
Here are 7 ways you can fix and improve your credit score and obtain credit cards and/or loans at favorable rates.
1. Reduce your balance to limit ratio.
When a company is reviewing your credit, most of them will look at the amount of balances on your current accounts and compare that figure to the amount of total outstanding credit you have available.
EX. Total Balances = $10,000 and Total Avail. Credit = $20,000.
Now in this example your ratio would be at 50% which in most cases would be frowned upon by lenders. The ideal ration would be anything less than 30%
A good idea would be to pay off those low balance credit cards to get your balance to limit ratio under 30%
2. Cut back your credit card usage.
Even if you are the type of person who typically pays off your credit cards every month, it is a good idea to keep your balances below 30% of the available credit limit.
Even though you are paying off your credit cards monthly your balance is still reported to the credit bureaus.
One of the best ways to keep track is by using financial software like Quicken or Microsoft Money. Using these programs can help you stay below 30% of your available credit limits.
3. Know your limits.
In some cases, your credit card companies may not report your limits to the credit bureaus. This may cause a drop in your FICO score.
What happens is the credit bureaus will use your highest balance as an estimation of your credit limit. So if you spend between $3000 and $3500 on your card monthly then on the credit bureaus you will look like you are using more of your available credit limit than you really are.
In most cases, you can call your credit card companies and have them report your limits to the credit bureaus.
4. Use your older cards.
One of the most important factors in determining your FICO score is the length of time a card has been open. The older the account the better it will make your credit score look.
It is a good idea to use your older cards every few months just to make sure that the credit card companies continue to update your information with the credit bureaus.
5. Help from credit card company.
If for the most part, you have been a good customer, you can call your credit card company and ask them to remove 1 or 2 late payments from your history. Most of the time, this request has to be made in writing but it is definitely worth a shot. Your chances of success using this method increase the better your record with your lender.
If you have had more than just 1 or 2 late payments, then another option would be to request that your lender "re-age" your account. Typically, this is where you and your lender work out an agreement that if you make 12 or more consecutive payments on time, they will delete any previous late payments.
6. Disputing your old negative items.
So you had a disagreement with a company over a bill a few years ago, and it is still hurting your credit today. Disputing that bill as "not mine" is an option you could use to fix or improve your credit score. A lot of times, if the item is relatively small and old, the credit card companies won't bother to respond to the credit bureaus investigation. Most of the time, this will cause the item to be removed from your credit history.
I have seen success disputing negative items when a lender has merged with another company. The merger causes older debts to get "lost in the shuffle."
7. Concentrate on the important stuff.
There are certain aspects of your credit report that really affect your score. It is important to know what they are and to really focus your attention on these items to repair and improve your credit score.
Here is a short list of the item I suggest you focus on:
1. Negative items that are not yours (e.g. Late payments, charge-off, or collections)
2. Incorrectly reported credit limits
3. Anything not listed as "Current" or "Paid as Agreed". (e.g. Settled, paid derogatory, or paid charge-off)
4. Accounts that shouldn't be there due to a bankruptcy.
5. Derogatory items that are older than 7 years that should have dropped off. It would be 10 years if you have a bankruptcy.
You want to be careful with this one because as we discussed earlier. Having aged accounts actually improves your credit score, even if they are negative accounts. It is not possible to know the effect of closing an old negative account. You are kind of "rolling the dice" when you do it.
As you can see, these 7 ways will get you on your way to raising your credit score and lowering your interest rates.
Good credit is obtainable if you just hunker down and put your mind to it. Following the tips above will help you get out of the credit "dog house".
By: Mosiekk Conley Copyright© 2006
About the Author
Mosiekk Conley is the creator of the "Quickly And Legally Improving Your Credit Score Video Ecourse" where you will learn 10 more easy ways to fix and improve your credit score yourself. To start receiving this course:
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