checked your credit score and found it to be less than stellar. The
problem is, you will soon be in the market to buy a new home or new
car. You’ve got to take steps to improve your score or you risk paying
higher interest rates or even worse, not qualifying at all. Credit
scores are used by lenders to indicate a person’s credit worthiness.
The most widely used formula to calculate credit worthiness is the FICO
score developed by Fair Isaacs & Co. This formula is used by most
lenders of large loans.
credit score is not perfect, hope is not lost. The following are five
ways you can improve your score and your chances of getting the loan
Check your credit reports and scores.
have shown that many people do not check their credit reports regularly
and many do not know what their credit score is. Changes in the Fair
Reporting Credit Act (FRCA) now allow for all consumers to view a free
annual credit report from all three of the major credit reporting
agencies. Pull your credit reports regularly to see where you stand.
Often your credit report contains erroneous information that can be
contributing to lower scores.
Correct incorrect information.
hard enough keeping correct credit information straight. You don’t need
inaccurate information weighing you down. Check the accuracy of all
personal information as well as payment reporting information. Federal
law mandates that credit reporting agencies and those providing the
information have an obligation to correct information in your report
that is inaccurate or incomplete. Send letters to both the agency and
referring business notifying them of errors. The credit reporting
agency has 30 days to investigate and correct the errors. If they do
not update your file with accurate information, the error must be
Make timely payments.
best way to show lenders that you are on the straight and narrow path
of responsibility is to pay your bills on time. Late payments seriously
impair your credit score and the delinquency will remain on your report
for at least seven years.
Pay down your balances.
great way to give your credit score a boost is to pay down your high
balances. Long standing high balances can really zap your score.
Outstanding debt accounts for 30% of our FICO score. It is recommended
that balances stay at round 25% of your credit limit. This assures
lenders that you are not tinkering on the edge of default and have the
resources to maintain your accounts.
Do not close accounts with good history.
it’s important to pay down credit balances, you do not however want to
close any long standing accounts with good histories. This can actually
have a deleterious effect. You want lenders to recognize your long
record of good payment. If you close these accounts, they will roll off
of your reports after seven years, thus eliminating your impressive
payment history. Instead of closing these accounts, pay them down and
use them every so often to continue to show an active account in good