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Your Credit Score ~ The bottom line

March 18, 2013

Your credit score affects your ability to borrow money and how much it will cost you to borrow. Keeping a credit score above 700 is imperative to borrowing money at the best rates. If you are under 620 you will  pay more to borrow if it is possible at all.

If you have let your credit score slip due to foreseen or unforeseen circumstances, repair it as quickly as possible. The cost can be hundreds of dollars every year until you have changed whatever is necessary to get it back up. There are a few simple fixes that can lead back to much better interest and insurance rates.

You can get your credit score once a year for free, so it pays take the time to check where you stand. It also does not hurt your score when you check yourself, so it is a good idea to check it every 6 months if you are rebuilding.  FICO is the agency lenders use when they are evaluating your past ability to pay, so it is where you get the numbers for their final decision.

There are a number of things you can do to get your score back up fairly quickly.  Most are very simple, but they all require your attention and action to implement the changes.

1)  Pay all bills promptly or ahead of due date. This includes utility bills which are expected occurrences. If you are regularly late it will negatively affect your score.

2)  Get a small ( affordable) loan and pay the installments on time. Ensure that the lender  is reporting to all three credit bureaus.

3)  Get a credit card if you do not have one.  If you cannot qualify for a credit card, go for a secured credit card that has your deposit as the limit.  Again make sure the lender is reporting to all credit bureaus.

4) Pay your credit cards off every month. This leaves you with available credit you are not using, part of the formula that credit bureaus use to set your credit score.

5) Do not max your card every month and pay it off the belief that this will help your score. Using a small portion, about 25% to 35%,  of your card every month and paying it off  works better. This shows available unused credit indicating  responsible debt management, thereby increasing your score.

6)  Like wine, old credit is better than new credit. So if you have a credit car you have not been using, start using it. If you leave it unused too long, it may be shut down. If your score is fairly reasonable and you  are just trying to improve your credit, try to increase the limit.  Make sure the company is reporting your to all three credit bureaus while you are on the phone.

7)  Make sure your company is reporting your limit to the credit bureau. If they are not, there is no indication of unused credit and you will get a lower score. If you have increased your credit limit and it is not accurately reflected on your report, call your lender to get it changed. Otherwise it will artifically lower your score.

8)  Get  your credit report and go through it with a fine toothed comb. Highlight any entries that seem inaccurate or outdated. Check with the lenders who made the reports that you deem inaccurate. Contact them and try to get the report changed. If they refuse to do this , you can challenge them through the credit bureau.

So if your life and credit took a hit, you can use these tips to rebuild your credit score back to the magic 700 in the quickest way possible.  If you are over 700 it it will help, but it is a longer process, more a matter of tweaking than rebuilding.

If you want to avoid this scenario by paying the bank less of your hard earned money, contact me at 250.766.2106 or fredmurray@shaw. If you can qualify, we can save you up to half of the payments you are legally obligated to pay your present lender.

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10 Comments
  1. How do you improve your credit score report if you already pay all your credit card bills on time?

    • If you are not using your existing credit to get the maximum credit score. Reread the post to see about extending your limit and not changing your spending habits. Then you have a larger unused credit limit thereby increasing your score. If your score is above 720, it takes more to get a large increase in it. I hope that helped.

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