Ever since the financial crisis of 2008, consumer credit scores have suffered an unparalleled drop.
Given that your credit score is used to determine whether you can get credit, what interest rates you pay, the amount of your insurance premiums, and even your ability to get a job, you cannot overlook the importance of your credit any longer.
Here are a few steps you can take to improve your credit.
1) Catch up on your bills.
Payment history accounts for 35% of your credit scores, with the last 6 months carrying the most weight. The first and most important step to improving your credit is paying all of your bills on time, every time. A recent late payment can drag your credit score down by as much as 120 points.
Tip: If organization is not your forte, set up automatic bill pay with your creditors to make sure that your payments are always on time.
2) Re-Build your credit.
Rebuilding your credit is a very important part of any successful credit repair program. Because a large amount of your credit scores are calculated by how well you use your credit, it is imperative to begin rebuilding as soon as possible.
Tip: Secured credit cards are a great way of rebuilding credit. You will have to provide a deposit, but you will also have the opportunity to prove that you’ve turned over a new leaf and become more responsible. You can read about the differences between secured and unsecured loans here.
3) Keep your credit card balances low.
The balances you keep on your credit cards account for a large chunk of your credit scores. Maxing out your cards will drive down your credit scores, so keep your credit card balances at a 30% utilization rate or less.
Explanation: Your utilization rate is the ratio of your balance divided by your credit limit.
4) Keep your oldest accounts open.
About 15% of your credit score is the average length of your open and active accounts. Closing old accounts may shorten your average length of credit history and lower your credit scores.
5) Limit your inquiries.
An inquiry is a record of you applying for credit. Don’t apply for credit more than once every 6 months.
6) Fix your credit reports.
Hire a reputable credit repair service to help you leverage your consumer rights under the FCRA and go after your creditors, collection agencies, and credit bureaus. A credit repair service will help to make sure that your credit repair process is compliant with all state and federal laws, as well as without delay.
7) Track your progress.
Credit monitoring sites are a great way of getting constant updates on your credit. But they can get rather expensive. Thankfully, there are some great FREE tools that you can utilize to track your credit.
You can obtain your free credit reports at www.annualcreditreport.com
You can get access to free credit scores and free credit alerts at;