A poor credit score can cause you several problems that go beyond having to pay more for credit if you can even obtain any loans. Credit scores can be used in determination of services, insurance rates and even potential jobs. Fortunately, fixing your credit or improving your score can be easier than you think.
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Start by obtaining a credit report from all three credit reporting agencies. You are entitled to one free report each year. Scan your report to determine all of your issues and to make sure it is accurate. Credit agencies determine your score based on a myriad of factors the major factors include: payment history, amount of debt, age of accounts, account mix, and history of applying for credit.
After this review, start by correcting any late payment or past due accounts. This is the first step in improving your score. Don’t be tempted to close older accounts, as the length of time you have had credit is another important factor. If you have any collection items or judgements, work to get those rectified. This will help put your past history in better standing.
After these steps move to the next level which is developing a mix of credit. This might mean opening a credit card or an installment loan if you don’t already have both. Next, work on your credit utilization ratio which is the amount of your credit limits that you are using. Attempt to pay down any debt to get under 50% utilized of credit limits. Finally, don’t apply for every store charge and credit card. Lots of inquiries at one time can ding your credit score.
These simple steps will put you on the road to credit score recovery. It may take nine to twelve months depending upon your situation but after this time you should start seeing an improvement in your score. And once you start making improvements, you will see that your score will rise quicker as long as you adhere to these basic credit score principles.