Reap the Benefits of a Higher Credit Score
One of the most important aspects of your personal financial profile is your credit score. Most recognize the FICO credit score as the measure of a person’s history of borrowing and repaying debt, but your credit score can be used in a number of ways to limit or expand your ability to get a job, get a loan for a major purchase, such as a car or home, or secure low rates for insurance. Those with less-than-perfect credit are wise to seek ways to improve their credit score; however, rebuilding your credit can be a slow endeavor unless you exercise the ways in which you can raise your credit score quickly.
The benefits of a higher credit score cannot be overstated. Your credit score can make the difference between getting a mortgage for your dream home or being forced to settle for a cheaper home. Your credit score can also prohibit you from taking advantage of your insurance company’s best premium rates.
In order to repair your credit and reap the benefits of a higher credit score, pay attention to these proven successful steps.
Obtain Your Credit Report
Getting a clear view of your credit history is the first step in repairing your credit score. You can retrieve your credit score once per year for free thanks to the Fair and Accurate Credit Transactions Act of 2003. Free copies of your credit report from the three major reporting agencies (TransUnion, Equifax and Experian) will enable you to see what inclusions to your credit profile are affecting your credit score. Armed with detailed information related to your credit history will enable you to address delinquent accounts, correct errors that affect your credit score and calculate your total debt for potential consolidation relief.
Contacting your creditors can provide you with an avenue to resolve past-due accounts that are weighing down your credit score. Commonly, creditors will be open to making payment arrangements in order to reclassify outstanding debts to a more favorable designation; meaning, instead of being listed as a severely delinquent account, your credit report can reflect a balance due but arrangements in place to satisfy the debt. While this avenue is unlikely to raise your credit score, your credit profile will be improved by the reclassification of debt.
Calculate All That You Owe
After viewing your credit report and contacting creditors to make payment arrangements, calculate all of your outstanding debt to be used in your effort to consolidate your debt into one payment. Debt consolidation is an effective tool in getting a variety of debt under one account to lower interest rates, ease the payment process and signal your intent to satisfy previously neglected account balances.
If you have no outstanding debt to pay and want to raise a credit score that's bogged down by slow payments and/or charged-off accounts from your past, you will need to take steps to build your credit profile, which will in turn raise your credit score.
Repair Your Credit With a Secured Credit Card
One way to effectively raise your credit score is by opening a secured credit card account. A secured credit card is an account that relies on a deposit to “secure” your credit limit. Most financial institutions that offer secured credit card accounts require a deposit of up to 100 percent of the intended credit limit. For example, a secured credit card with a $300 credit limit will require making a prior deposit of up to $300. The credit card account will then function much like a traditional or unsecured credit card; you can use the card for purchases and cash advances and are required to make payments toward the balance you incur through spending.
After a certain amount of time (which varies by bank and secured credit card), you will be able to have your initial deposit returned, at which time you can continue to use the card as an unsecured card or apply for an unsecured credit card with lower rates and better repayment terms.
Your payment record will be reported to the credit bureaus and help improve your credit score.
How Your Credit Score Helps
Your ability to obtain a loan with low rates is dependent upon three main aspects of your financial profile:
1. Stability. The length of time at your current job and current address.
2. Ability. Your income and financial obligations to judge your means for repaying the loan.
3. Willingness to pay. Your credit history, including your credit score.
By effectively addressing your credit history challenges and taking steps to improve your credit score through consolidation and secured credit account maintenance, you will be able to take advantage of the various benefits that come with having a higher credit score.