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Free Credit Tips to Increase Your Credit Score
Do
you have a low Credit Score? Are you paying really high interest
rates because you don't qualify for lower rates,
all because of you have a low Credit Score?
Do you need some tips on how to raise your Credit
Score quickly?
Well you
have come to the right place. Using the free
tips on this page, along with our recommended tools, you
will be able to increase
your Credit Score and more importantly, learn what
to do to keep it high in the future.
Why are Credit Scores so important? Credit
Scores effect many financial transactions you do
including buying a home, car, applying for credit
cards, sometimes even getting a new job.
View
Your
3 Credit
Reports and Scores
Online Instantly - Free for 30 Days
Bad Credit? Get Professional Help From the Industry Leader
in Credit Repair - Only $99 to Start
Find Out if You are Paying
too Much For Your Mortgage
- Bad Credit OK
A
word of caution:
There are many
Internet sites that charge you a small
fortune for a book that will tell you
"secret ways" to increase your
Credit Score.
What you need to understand is that they
all try and fix your Credit Score the
same way, mainly by
disputing negative items. Some of them
will even tell you do things that are
illegal, like setup a new Tax ID number.
You should avoid these tactics.
With
the free tips available on this page,
you can fix your credit report yourself,
and keep it high for the future.
Remember, whatever time or money you
spend on increasing your Credit Score
and keeping it high will pay for itself
many times over because of the lower
costs on your home, car, credit cards,
and even insurance.
Professional Credit Repair Agencies
If you
are thinking of hiring a professional
Credit Repair Agency, we really
recommend getting your
Credit
Report first, and then seeing how
much work you need to do to. If
your score is low because of high debt
levels, a credit repair agency is
probably not a good idea. However,
if your Credit Score is low because of
lots of late payments, deragatory items,
etc. then instead of doing the work
yourself you may want to hire
The Lexington Law Firm
If you need to raise your
Credit Score,
and don't want to do all the work yourself, we highly recommend
using The Lexington Law Firm
to fix your credit report and
increase your Credit Score. Why
choose them over anybody else? The Credit Repair
business has a bad reputation, so you
need to be careful about who you hire to
represent you.
The Lexington Law Firm
has been around since 1991, has over
300,000 satisfied clients, and is the
industry leader in this field. Their fees
are very reasonable, and again will pay
for themselves many times over once they
have increased your Credit Score.
It's like mowing the lawn, you can
either do the work yourself or pay a
landscaper to do it for you to save you
the time and hassle.
Getting Your 3 Credit Reports - The
Crucial First Step:
-
The first step
in the process is for you to get your Credit
Reports and Credit Scores. We highly
recommend using
Citi® Credit Monitoring Service
.($12.95
/ Month, first 30 days free). We
really like
Citi® Credit Monitoring Service
because you get access to all three Credit
Reports (Experian, Equifax, and Transunion) and
all three Credit Scores from these agencies.
As long as you remain a member, you will also
get any updates to your Credit Report monthly without having to
pay each time to check for updates that have
been posted.
Citi® Credit Monitoring Service
is not a credit agency themselves, so they have
access to all three Credit Reports and Scores.
Another
great feature of
Citi® Credit Monitoring Service
is that it comes with a "credit analyzer", which
will analyze your credit report information and
tell you how doing certain things (paying back
debt, applying for a new car loan, getting a new
credit card, etc.) might
effect your Credit Score. The analyzer also tells
you what items in your Credit Report are
effecting your score in a positive or negative
way.
The first
30 Days are Free, so you really have nothing to lose if
you don't like the service.
We really believe that this is the most
important tool you need to have in order to
effectively understand your
Credit Score.
Without this key information, you won't know
what your scores are, how to possibly increase
them, or even what to dispute if you find
inaccurate data.
Remember, removing inaccurate information Credit
Report or
doing certain other actions can dramatically
affect your Credit Scores.
(You can also
get your credit report free once a year from the
government, however it wont include your credit
score or any analysis, and since it's only
once year so you can't monitor how things are
changing monthly.)
How Credit Agencies
Determine Your Credit Score
The three credit
reporting agencies are Experian,
TransUnion, and Equifax. Since
some lenders only report to one of these
three companies, you will probably have three
different credit scores based on the
different information each one has about
you.
Your
credit score is determined by the following
estimated %
breakdown:
-
35% Payment history
-
30% Outstanding debt
-
15% Length of your credit
history
-
10% Recent inquiries on your
credit report
-
10% Types of credit in use
Below is a table showing a
sampling of possible different score ranges and
how they can affect a mortgage payment:
|
Score Range |
Rating |
% of US Population |
Extra Cost Per month for a 200K Loan |
|
780+ |
Perfect |
20 |
$0 |
|
720-780 |
Excellent |
20 |
$0 |
|
675-720 |
Average |
20 |
$86 |
|
620-690 |
Fair |
20 |
$242 |
|
Below 620 |
Low |
20 |
$353 |
View
Your
3 Credit
Reports and Scores
Online Instantly - Free for 30 Days
Bad Credit? Get Professional Help From the Industry Leader
in Credit Repair - Only $99 to Start
Find Out if You are Paying
too Much For Your Mortgage
- Bad Credit OK
Some
lenders will look at the scores from all
three reports, while some might only
look at one. Remember, you don't
lose any Credit Score points for
checking your own Credit Report. You will lose some points if there a
number of credit inquiries over time for
applications such credit cards, auto
loans, department store credit cards,
etc. that you have initiated. You will lose some points if there a
number of credit inquiries over time for
applications such credit cards, auto
loans, department store credit cards,
etc. hurt your overall credit score. Think about this next time you
get an offer for 10% off your purchase just for signing up for a store credit
card, and just say no! You might save $20 now, but could lose much more than
that later due to a worse credit score. Plus if you forget to make
payments, it will really negatively
effect your credit, and you might be
charged late fees, etc.
Also, if you are shopping for a car or
mortgage, try and keep all the inquiries
to within two weeks since credit scoring
companies will only treat all these as
one "inquiry" on your credit report,
instead of multiple inquiries.
Another key thing to remember is your
Credit Score is not based on how "clean"
your Credit Report looks. You may
have many things on your credit report
that drag on for years, but remember
these are good things since they show
credit history. As long as they
don't show very late payments, they are
adding points to your score since you
have proven to be a reliable consumer
who can pay back debts in a timely
matter.
Don't contact these vendors and close
accounts since it might hurt your score.
The items you are very interested in are late
payments, judgments, delinquencies, etc.
You can close accounts that are less
than a year old, however we recommend focusing
our energy on things that can really
make a big difference.
Once you've received your credit report, look at
the percentage breakdown above and focus on the
thing that will help you increase your score,
such as payment history and outstanding debt.
View
Your
3 Credit
Reports and Scores
Online Instantly - Free for 30 Days
Bad Credit? Get Professional Help From the Industry Leader
in Credit Repair - Only $99 to Start
Find Out if You are Paying
too Much For Your Mortgage
- Bad Credit OK
How to Dispute Items on Your Credit
Report
First thing is to make sure
everything on your credit report is right.
If you see something wrong, make sure you
dispute it with the agency. You can dispute
it by way of phone, letter, online or via email.
If you need to
dispute something with Experian, use this link to the online
Experian dispute
site. If you need
to dispute something with either Equifax or
TransUnion, use this
Credit Dispute PDF form.
Make sure that you mail the form via USPS and
get a receipt that it was delivered and what
date.
How Credit
Disputes Work
By law, the creditor must prove
the accuracy of what you are disputing within 30
days. If they don't, it simply is removed from your
Credit Report. If you have evidence that something
is wrong, then submit the evidence and they will
have to remove the inaccurate data within 30 days or
prove that it's accurate. Even it you don't
remember if it's 100% accurate, dispute it since the
creditor will have to prove that the information is
accurate. Many times they can't do this since
they might have lost the records, etc. A good
time to dispute is around any holidays, where the
vendor may not have the time to respond since they
are busy with selling new stuff, not worried about
some debt from
3 years ago.
Negotiating with Creditors and Collection Agencies
If you have any accounts in
collections or that are very past due on your credit
report, you need to get them removed to really
increase your Credit Score. Again, by getting
your
Credit Report
you may find
things you never even knew about! For these
items you will have to contact the creditor or
collection agency directly. If the collection
agency already has the debt, then deal with them and
don't bother calling the original creditor.
Our advice is to offer to pay 50% of
your debt and negotiate upwards from there, however only if they remove you bad credit history
off your Credit Report. (Not Just have it Marked Paid, very
important!) Make sure you get this in
writing, most agencies will take the opportunity to
collect the bad debt and happily remove the bad
credit history from your report, helping your Credit
Score. Settling a 2K debt for 1K, which will then
dramatically increase your score, is well worth it since you will be saving some much more money on
future interest costs with a higher Credit Score. Negotiate hard with
these agencies, but remember your goal is to get the
bad credit history removed from your report, not
just mark paid.
Removing these items will dramatically increase your
credit score since derogatory items are weighed
heavily in your Credit Score calculation.
Note:
If you have already paid off these derogatory
items, sometimes disputing it with the agency or
original creditor again
may work since it will be their burden to prove the
bad credit history,
and they usually wont bother disputing it since it's
already been paid off and it's even more work for them.
However, we really recommend taking care of the
issue before you pay off the debt, when you have the
most negotiating leverage.
View
Your
3 Credit
Reports and Scores
Online Instantly - Free for 30 Days
Bad Credit? Get Professional Help From the Industry Leader
in Credit Repair - Only $99 to Start
Find Out if You are Paying
too Much For Your Mortgage
- Bad Credit OK
Other Ways to Boost Your Credit Score
If your credit needs some quick
boosting, and you have extra cash, pay down as
much of your debt as possible. The lower your
ratio of current debt to available credit limits the
better you look to a lender, and the higher your
credit score will be. The flip side of this is
to call existing credit card accounts you may have
and ask them to increase your limit, though
you won't actually use it. This will also
increase your credit score.
Note: Do not open
additional credit card accounts to increase this
ratio, since that may hurt your credit. But
increased credit limits on existing accounts will
help since you will be lower your overall debt
ratio.
For example, if you have 10K in
debt with a 15K credit limit, your ration is 2/3 or
67%. However, if you increase your credit
limit or pay down your 10K, you will lower your
ratio 50% or less, which will help your Credit
Score. Also, be very careful of Capital One
credit cards, for some reason Capital One will
sometimes report a $0 Credit line which might cause a lower
Credit Score
in some instances.
Cancel some cards if you have too many, but if you are carrying
debt try to keep the ratio of debt to available credit limits at around
40%, with about four cards for the best Credit Score. Don't cancel
cards if it will put you below this ratio, and if you have to cancel cards make
sure you only cancel ones with less than one year of history with. Do not
cancel cards that are older then one year, remember your Credit Report does not
get points for being clean of old accounts. Focus on doing the right
things in order to increase your score, not cleaning up your report of old
accounts. Cleaning up may actually have a negative impact on your Credit Score!
Another great way of helping your score is by spreading your
debt to different cards. Although you may pay more interest, your Credit Score
will improve since not all your debt will be on one card that is close to
it's credit limit. For example, if you have 20K limit on one card with 18K of
debt, and have another card with a 15K limit with 2K of debt, its better to move
8K of debt from the higher card to the lower card. By doing this you will
lower your ratio of debt to available credit on the one card, helping your
Credit Score even though you
haven't really paid anything down!
If you have no debt and have had no credit history within two
years, go get some! Even though you don't need to fix your Credit
Score, you do need to create some credit history. This may sound strange to take
on debt, but it
works very well since it shows you can borrow and pay back large amounts of
cash. Begin responsibly using a credit card for as much as possible and
pay it back in full every month. Or take out one of those promotional low %
point loans
from one of your credit cards for as much as possible, put the cash into an
account, and pay it back slowly (but before the special interest rate expires -- and
don't spend it!). You will notice your scores dramatically improve after
you have paid back the debt since you now have good credit history.
Remember, it's never too late to start building your credit.
If you have a partner/spouse or relative with good credit, have
them add you to their credit card. This works very well since you
will get credit for their payment of bills, and this will create more positive
credit history for you.
Pay your bills on time by having them
automatically deducted from your bank account or paid
online before they are due. Being consistently late with payments is the
easiest way to lower your score, and also the easiest way to keep your credit
improving month after month - just pay your credit card bills on time or early!
Even if you can only swing the minimum payment, get the payment there before the
due date. Most credit card companies allow you to pay online, so make sure you
take advantage of this and don't waste time and money on stamps and mailings.
Keep the amount of credit cards you have to a minimum, so you don't forget to
pay them. (no store charge cards)
A Quick word of advice on
Credit Cards
We wont spend a lot of time on
this topic, since there is plenty of information on credit cards all over the
internet. However, we really like the following two credit cards:
Are you getting points or
other rewards for using a credit card? If not, ask yourself why the heck not? We
think the best credit card for rewards is the
American Express Starwood Card
hands down. Free hotel stays, and free flights after only 20K points.
Get it now, and next time stay at the W hotel for free!
If you have bad credit, we
recommend using the Orchard Bank Credit Card to help create
credit history and
Increase Your Credit Score, it was designed for people with lower credit scores.
One Last Piece
of Credit Score Advice
By looking at your credit report, find out how often and when
your lenders report. By timing your payments to right before they report
to the credit agency, you will be able to show less debt and thus have a higher
score! Again, this is why it's important to get your Credit Report to
learn what is out there so you can find out what and when things are being
reported. Even though you may have the same debt, by timing payments you
can increase your score since your debt will appear in the best possible light
for that time of the month.
It is estimated that on a new car
purchase for $20,000, the difference in payments between a person with good
credit and bad credit is almost $10,000 over the course of five years. This
number gets much bigger if you are looking for a mortgage since you are paying
very high interest over five to 30 years. You should do everything you can to
increase your credit score and remember to check it before making a big purchase
(house, car) so you can minimize your interest costs.
There are better things in life to
spend your money on than high interest costs.
View
Your
3 Credit
Reports and Scores
Online Instantly - Free for 30 Days
Bad Credit? Get Professional Help From the Industry Leader
in Credit Repair - Only $99 to Start
Find Out if You are Paying
too Much For Your Mortgage
- Bad Credit OK
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