6 ways to improve your credit in 2008
1. Get a copy of your credit report from all 3 national credit bureaus. Look for items on your credit reports that are not accurate. Dispute all the inaccurate items that are reported. Click here to order a credit report from all 3 bureas.
Also here’s some more information on Disputing Inaccurate Information.
2. Make a list of your debts. The main idea is to pay down your debts as soon as possible with any extra money you may have available. There are several strategies to consider regarding which balance to pay down first.
To cut costs and to minimize interest expenses for carrying the debts, it is best to use the extra money you have to pay down the credit obligations that carry the highest interest rate first. That’s the most cost-effective approach to paying down your debts because it lowers the amount of interest you are paying.
However, in the quest for a better credit score, it is sometimes advisable to pay down the credit cards with the highest usage first, that is, the credit cards with the highest balances relative to their credit line. That’s because having a credit card balance at or near its credit limit may lower your credit score. So if having a better credit score is important, it may be better to first pay down those debts where the balance is over 50% of the credit limit.
Another approach is to pay down small debt balances first to streamline your debt picture. That may also make bill paying easier by eventually having fewer bills to pay.
Again, any method can work depending on your circumstances, but bottomline, the idea is to get rid of or reduce the debts as soon as possible.
3. Pay your bills on time. Paying your bills on time is the cornerstone of a good credit report because late payments may be reported on your credit report for 7 years. That’s a long time, so it’s best to start ASAP to pay your bills as agreed and avoid damage to your credit report that will lower your credit score for years to come.
4. Keep your credit card usage as low as possible. If possible, never use more than 25 to 50% of your available credit limit. Also when looking at your credit report note how creditors are reporting your credit card limit. Some use your highest credit card usage as your credit limit. That method can hurt your score if you keep increasing your usage. These types of credit cards that report your high balance as your credit limit should be avoided if possible.
5. Do not apply for new credit accounts if you can help it. When you apply for a new account, or even apply for credit limit increases, the creditor will likely check your credit report. That triggers an inquiry on your credit report that may lower your credit score. It is best to avoid inquiries on your credit report whenever possible. However, note that you can check your own credit report as often as you like because you are not a lender, and your inquiry will not be counted in your credit score.
6. Don’t co-sign for others. Sometimes you have to co-sign, but generally it is best not to co-sign for another because if they do not pay their payments on time, the late payment will be reported on your credit report as well as theirs. Co-signing makes both of you obligated for the debt and the payments.
