Approximately 56 percent of consumers have poor credit ratings. This is a trend that has continued over the past decade.
Unfortunately, there are a wide array of factors that lead to these poor credit ratings; however, most people in this situation have one thing in common – they want solutions.
While there is no way to increase your credit rating overnight, there are some credit repair tips that may help you begin working toward the score you really want. If you are dedicated to making a change, then implementing these tips can help along the way.
Table of Contents
1. Check the Accuracy of Your Credit Reports
The first step to improving your credit rating is to make sure your credit reports are accurate. Everyone has three different credit reports, from each of the three credit bureaus:
- Experian
- Equifax
- TransUnion
In many cases, you may find mistakes on your credit report. If you find a mistake on any of your three credit reports, you need to dispute it. This is the first step in improving your credit rating.
Companies such as CreditReps have claimed that this is one of the most influential factors that affect your credit rating, so don’t ignore incorrect information.
2. Pay Your Bills on Time
When a lender reviews your credit report and accesses your credit score, they are going to look closely at how reliably you pay your bills. This is because past payment performance is a good predictor of your future performance.
You can impact this factor by making sure you always pay your bills on time. If you pay late or settle an account for less than what you originally owed, then this can negatively affect your score.
While you need to make sure you pay credit card bills on time, this also applies to auto loans, rent, your phone bill and utilities, student loans and more. If you are currently behind on payments, bring them current as soon as you can.
While a missed or late payment can appear as a negative mark on your credit report for up to seven years, the impact they have on your actual credit score is going to decline over time. Older late payments aren’t going to be as influential to your credit rating than newer ones.
3. Keep Up With Your Credit Card Balances
Do you know how much revolving credit you have versus how much you are actually using? The smaller that this percentage is, the better it reflects on your credit rating.
It’s ideal to have a rate of 30 percent or less.
To help boost your debt to credit ratio, you can pay your balances down and then make sure they stay low. If you have several credit card balances, then consider consolidating them with a personal loan or a balance transfer credit score. Both of these could help your score.
4. Apply for and Open New Credit Accounts Only When Necessary
You should not be trying to open new credit accounts just to improve your debt to credit ratio. In most cases, this isn’t going to help and improve your credit score.
The fact is, unnecessary credit may actually harm your credit score in several ways. It can result in a large number of hard inquiries to your credit report, and it may tempt you to spend more, accumulating even more debt.
5. Don’t Close Your Unused Credit Cards
Do you have unused credit cards? If so, you may be tempted to close the account. However, this isn’t always a smart move.
Keeping your unused credit cards active, as long as they don’t carry any annual fees, is actually a smart strategy. That’s because if you close an account, it may increase your credit utilization ratio.
If you owe the same amount, but reduce the number of open accounts you have, it could negatively impact your credit rating.
6. Don’t Make it Seem as Though You are Taking a Risk
In some cases, the best way for you to improve your credit score is by not doing something that may hurt it.
Two of the biggest mistakes seen in this scenario including charging more or suddenly paying less than what you normally do. Some of the other changes that may “scare” your card issuer includes:
- Paying for a divorce attorney
- Using your card at a pawnshop
- Taking cash advances
You don’t want to indicate that you are taking risks with your credit. While this may not instantly impact your credit score, it could impact your card issuer. As a result, it’s best to avoid hinting at any type of risk.
7. Don’t Obsess
If you know you are going to need credit soon, (such as to buy your first house) then you need to be focused on your credit rating. However, as long as you use your credit responsibly and pay your bills on time, your credit score is going to reflect these behaviors.
There’s no need to obsess about this number all the time. It may wind up driving your crazy.
Implement These Credit Repair Tips Today to Improve Your Score
If you are worried about your credit rating, then you should use the credit repair tips found here. Doing so will help you improve your rating and achieve better credit in the future.
If you found the tips here helpful, then check out some of our other informational articles, such as how to make sure your resume stands out. We are here to help you with all of life’s little challenges, so be sure to check back with us often to see what new tips we have available.
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