Your credit score is key to obtaining financing and many other aspects of financial activity. Your score should be monitored and cultivated at all times. A solid credit score can open opportunities to improve your financial performance, eliminate the need for collateral, and reduce the interest cost of credit.
Get your free credit report.
The primary credit reporting agencies are Equifax, Experian and TransUnion, and they will provide your credit report for review. Contact those agencies online to determine how you can review your report.
Review your report for errors, and correct them.
Lenders and debt-holders do make mistakes! Check your report carefully for accuracy. Look for any outstanding loan obligations that have been paid, or for any incorrect loan amounts outstanding. Contact any creditors where you find errors, to have the errors corrected. It is common for errors to occur – this step can make a significant difference to your credit score.
Avoid opening new credit cards.
Generally, a new credit application will reduce your credit score. Avoid applying for new credit, to improve your credit score. Lenders are concerned when a credit report shows new applications, so if you are planning for a loan, avoid adding new credit.
Reduce your credit utilization.
If you use too much credit, your score will be effected. Pay off loans to reduce your outstanding credit balances, this will directly improve your credit score. Consistently pay off debt over time, and your score will improve. Reduce high balances as much as possible. As you reduce your debt, you will spend less on interest, and the amount you spend each month to pay off bill will decline.
Pay bills on time.
Late payments and overdue accounts will be detrimental to your credit score. Any payments that are 60 days overdue are damaging to your score. Pay overdue accounts first, and work to make all future payments on time. Every overdue account that is paid will reflect in an improved credit score.
Maintain your credit accounts for the long term.
Lenders prefer long-term stability, so it is important to age your accounts and keep them for the long term. Closing a credit card account that you have had for a long time can cause a reduction in your credit score.
Negotiate debt repayment.
Contact your creditors to discuss your situation. Many lenders will negotiate a payment plan, which can reduce your overdue account balances, making them current. Your credit score will benefit from a reduction in overdue accounts.
Maintain focus for the long term.
Your credit score continues into the future. Maintaining your score is a long-term priority. Once you know the basics, keep your financial plans on track by monitoring your score and working to keep it healthy.