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Steps To Enhance Your Credit Report Score |
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There are about 30 million Americans who have less than stellar credit report scores and most of them are looking for quick fix solutions to repair their credit. Taking advantage of this desire, many unscrupulous companies coax those desiring to repair their credit with emails promising quick and easy credit repair. However, it is essential to know that there are no quick and easy legal ways to change a credit report if it is accurate. The credit report can only be repaired if you move in the right direction by understanding a little more about how the credit rating system works so that you can improve your credit report score. The first step is to understand what your credit report score is. This score varies between 300 and 850 and is assigned as per the assessment of the credit rating agencies. Lenders use this number to evaluate your creditworthiness while granting mortgage, car loan or a credit card. Employers, landlords, insurers and others also use this number in evaluating applications. If your credit report score is sub-prime (560 or under and those consumers with little or no credit history, consumers who have filed bankruptcy within the past 10 years, those who have a terrible track record over the past seven years of paying their bills on time, or consumers currently carrying far too much debt for their income level), you should understand how the credit report scores are determined. This is also required for those who have good ratings and want to make them even better. To improve your credit report score, get your credit reports from all three major credit reporting agencies, as each agency might have a different score depending on the information received from lenders. There might even be some mistakes in the credit report and it is essential to check the credit reports so that the mistakes can be located and measures taken to have them rectified. The most important step to improve your score is to pay your bills on time. Up to 35% of your credit report score is influenced by how you pay your bills. Moreover, the recent bill paying history carries more weight than your past history. So, if you make all your payments on time, you will be able to improve your credit report score. Similarly, if you miss even a couple of payments your credit report score can come tumbling down with the added disadvantage of having your credit card interest rate raised by the credit card companies. Apart from paying your bills on time, you can improve your credit report score by reducing your debt load. It is important to distinguish between legitimate credit counseling services with debt settlement firms. Although credit counseling firms help to consolidate payments and lower the interest rates, you will still have to pay the full amount you owe to the creditors. On the other hand, debt settlement firms typically have you pay less than you owe and this will certainly reflect negatively on your credit report score. There have been cases when some debt settlement firms have been known to simply take your payments and never forward them to your credit card companies thus making your credit report even worse. Last but not least, avoid bankruptcy as it can shift your credit report score into the sub-prime level which will make it almost impossible for you to get credit in the future at reasonable rates. It is interesting to note that high interest credit card lenders love to offer credit after a bankruptcy because they know that once you file bankruptcy, you are not allowed to do it again for six years. However, most lenders refuse loans to people with a bankruptcy and even employers, landlords, insurers and others will not look kindly as they often access your credit report. It is obvious that that there are no quick fix solutions to negative credit reports but you can certainly take legitimate steps to improve your credit. With a little bit of perseverance, you will find that your credit report score will rise. |
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