Repairing Your Credit Score
- By Stuart Hunter
- Published 08/20/2009
- Finance
- Unrated
Stuart Hunter
Providing credit repair services since 1991, Lexington Law has helped over 500,000 clients legally take on their credit. Last year alone, Lexington Law helped clients remove over 600,000 negative items from their credit reports.
View all articles by Stuart HunterImproving a Bad Credit Score
Millions of consumers throughout this country struggle with the effects of having bad credit. Some are turned down for credit cards or car loans, others learn their applications for mortgage refinancing have been rejected. If you are experiencing the restrictions that get imposed on people with poor credit, you may already realize that your credit is in need of repair. These days, getting information about what you can do to repair your credit score doesn't have to be frustrating or stressful, thanks the wealth of credit resources available to consumers.
* Pay your bills on time - Your payment history makes up 35 percent of your credit score. A period of not making your payments on time will quickly drop your score but since the effect of a late payment wanes over time, focusing on making all payments on time from today on will get your score moving in the right direction.
* Try to maintain low balances on your credit cards - Outstanding debt makes up 30 percent of your credit score. The closer you are to reaching the limit on your credit cards, the less stable your finances will appear.
Keeping credit card balances below 30 percent of the available limit will make your credit utilization ratio look better which will be reflected positively in your credit score.
* Avoid shifting your debt between credit cards - Transferring debts to a low interest rate card is a good strategy when trying to whittle down debt, but constantly moving balances between cards looks like you are robbing Peter to pay Paul instead of making your monthly payments.
* Carefully study credit applications before accepting - Some loans, including retail store lines of credit, are loaded with fine print and other strings attached that can end up causing big problems down the road. For example, some no payment, no interest financing programs offered by retailers include rates that can skyrocket if you are late on a single payment and clauses where you may still be responsible for interest accrued during the "no interest" period.
Lastly, for people who need additional assistance addressing their bad credit, another excellent resource for consumers are professional credit repair services. Professionals can provide their valuable expertise on important matters like disputing the questionable negative items on your credit report and specific steps you may be able to take to make the most of your credit.
Tips to Improve Your Credit Score
Credit scores are a tool used by businesses and lenders to determine the likelihood a consumer will repay a loan. Fortunately for those with lower credit scores, this rating is not set in stone. there are many things you may be able to do to increase your credit score.* Pay your bills on time - Your payment history makes up 35 percent of your credit score. A period of not making your payments on time will quickly drop your score but since the effect of a late payment wanes over time, focusing on making all payments on time from today on will get your score moving in the right direction.
* Try to maintain low balances on your credit cards - Outstanding debt makes up 30 percent of your credit score. The closer you are to reaching the limit on your credit cards, the less stable your finances will appear.
* Avoid shifting your debt between credit cards - Transferring debts to a low interest rate card is a good strategy when trying to whittle down debt, but constantly moving balances between cards looks like you are robbing Peter to pay Paul instead of making your monthly payments.
* Carefully study credit applications before accepting - Some loans, including retail store lines of credit, are loaded with fine print and other strings attached that can end up causing big problems down the road. For example, some no payment, no interest financing programs offered by retailers include rates that can skyrocket if you are late on a single payment and clauses where you may still be responsible for interest accrued during the "no interest" period.
Lastly, for people who need additional assistance addressing their bad credit, another excellent resource for consumers are professional credit repair services. Professionals can provide their valuable expertise on important matters like disputing the questionable negative items on your credit report and specific steps you may be able to take to make the most of your credit.