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Jenny Corteza has a passion for writing. After her degree in finance, she chose to pursue law. Since she was already inclined towards writing, she started maintaining a finance and law blog alongside her internships. The blog was well received and is still prospering.
Building back a good credit score is not very difficult though it may seem a bit of a bother to do it. We will tell you how you achieve this in five simple ways.
1. Credit Report Errors
Credit reports are not all very accurate. There have been reports that potential errors have been spotted in credit reports. You must review the credit reports to see if any mistakes have crept in. You can review all the agencies’ reports like Experian, TansUnion and Equifax. You can report discrepancies, if any, to them. Send them a dispute letter through certified mail highlighting the disputed item in the credit report. Make it clear in your letter why you think that the pertaining information is erroneous. The Fair Credit Reporting Act says that the a CRA must reply to your dispute in a matter of 30 days. In case the dispute is rejected, ask them to add an addendum to disclose this information.
2. Pay Down Debt Balances
30% of credit score is arrived at by taking your outstanding debt balances. If you incur more and more debt, your debt-to-available credit ratio will also increase more and more. This will result in lowering your credit balance. You have to examine your variable expenses and try to cut down on them in order to allocate the saved amount to pay down outstanding debt balances. Many people fall into the minimum-payment trap. Do not do that mistake but start with debts that have excessive APRs. Try to avoid late fee on delayed payments on all other debts you have. Penalties can damage your credit score that is in any case is in robust health.
3. Apply Sparingly for Credit
Offers by credit card companies can be very attractive but what you do not know is that each card will have only a small amount pending for payment but added up, they will take on a formidable stature. You must remember that they determine 10% of your credit score by taking into account the new credit applications. As the inquiries are going to be on the increase, a prospective Direct Payday lender may not be willing to take risks on your behalf. And, since a credit card needs to be used instead of lying unused, you will most likely run up a credit you may not be able to manage effectively.
4. Make on Time Payments
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Timely payment of your credit is essential because your payment history is given 35% space for determining credit score. When you default on payments, it will be carried through for 7 years after you had defaulted and will be held against you in future transactions and credit scores. If you tend to delay or default your payments, you might be able to convince your creditor to make changes in billing cycle according to your convenience to make timely payments. If it is not financial difficulties but your busy schedules that cause your late payments, pay up as soon as you the bills arrive or make arrangements with your bank for automatic payments.
5. Closing Old Credit Cards
Unused credit cards are charged dormancy fee by credit card companies. So, unless you cancel them altogether, use them occasionally. But remember, closing the card will mean debt-to-available credit will be adversely affected.
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