If you have ever tried to get a loan, you know how important your credit score is. That mysterious, magical number can either guarantee you a loan with a low interest rate or guarantee that you will be denied outright. Most of us are somewhere in between, facing higher interest rates and insurance premiums because of a not-so-stellar credit score. It’s not always easy to raise that score, but with a plan and patience, you can gradually bring the number up to a more desirable range.
Know What Factors Affect Your Score
The first thing to understand is what has contributed to your current credit score. Credit reporting agencies use a variety of factors to calculate your credit score. The following poor financial habits will negatively affect your credit score:
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Frequently paying bills late
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Owing debt equal to or close to your credit limits
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Having a short credit history
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Applying for too many credit cards
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Having too many of the same kinds of credit accounts (e.g. installment loans or credit cards)
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Declaring bankruptcy
If these traits describe you, your first goal should be to change as many of them as possible. This will not be easy for many people.
Improving Your Credit Score
Even when you have made the commitment to change your bad habits and improve your credit score, it will take some time. If you have declared bankruptcy, you will have to wait 7-10 years for that to be removed from your credit report. However, after about 2 years from discharge, your score will begin to improve if no further negative entries are added. If you have not declared bankruptcy, the process should be much faster. For some people, it can be as little as 30-90 days, but it depends on your history and debt load. The Federal Reserve recommends taking the following steps immediately to improve your credit score over time:
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Get copies of your credit reports and make sure they are accurate.
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Pay all your bills on time.
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Learn the legal steps to take to improve your credit report.
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Beware of credit repair scams.
While this may sound simple enough, we understand that it is not so easy for many Americans. Repairing credit requires discipline and patience. You will need to create a budget so that bills get paid on time and stick to it. If there is false information on your credit report that is lowering your score, however, you may be able to take legal action to have it removed. If you have contacted the credit reporting agencies to no avail, contact us through the link on this page to see if we can help.
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