If you’re tired of applying for credit only to have creditors reject your application, perhaps it’s time to take action and raise your credit score. Credit scores play a pivotal role in the finance world. If you’re buying a car or purchasing a home with financing, expect the bank to check your credit history along with your income. Several negative remarks or credit blunders can kill your chances of obtaining financing. But this doesn’t have to be your reality.
Increasing your credit score by 100 points can completely change your credit options. Although a jump of this nature doesn’t happen overnight, with better credit habits, you can see a massive improvement in about six months.
Pay off a car loan or credit card.
Carrying a large debt balance can lower your credit rating. This is an unknown fact for many, and people who continually acquire credit card debt or apply for new refinancing may be shocked by a drop in credit scoring. Want to see your credit score jump? Pay off a car loan, a credit card or another type of debt and quickly add points to your rating.
Don’t skip a payment.
Once skipped payment can set back your efforts to raise your credit score in six months. Some people underestimate the damaging effect of a skipped payment. But if applying for a mortgage loan, some lenders will not approve your application if you have one or two skipped payments in the last 12 months. Do whatever it takes to make sure payments arrive to your creditors in a timely manner. Some consumers set up automated payment arrangements with their creditors, in which payments are automatically drafted from their bank on the due date. Then again, other consumers don’t wait until the last minute and pay credit card bills as soon as the statement arrives in the mail.
Check credit report for accuracy.
Don’t know why your credit score is so low? Maybe the problem isn’t your credit habits, but your credit report. Go to Annualcreditreport.com and order a free copy of your reports from each of the three credit bureaus. Examine each report for accuracy, and file an online dispute if you recognize errors. Serious credit blunders, such as a foreclosure, repossession, a bankruptcy or a judgment can deduct as much as 100 points (or more) from your credit score. Remove erroneous remarks and you can reach your credit score goal.
Stop applying for new accounts.
If you’re working toward a better credit score, now is not the time to apply for new accounts. Credit inquiries reduce your credit score. In fact, a single inquiry can knock 10 points off your credit rating. Apply for five new accounts, and you can reduce your credit score by up to 50 points.
