We live in a credit nation. The mistakes in handling credit are well documented but even so no one would dispute the importance of having good credit. Your credit score, when handled properly, can give you many advantages to creating wealth through leverage. Here are some credit basics to improving your scores.
Step 1: Go directly to the source to see what exactly your credit is. You will want to pull all three credit reports from equifax.com, transunion.com, and experian.com. These are the bureaus that your creditors report to and you will need to investigate all three to determine what incorrect and derogatory items you have.
Make sure that you order your reports from these three bureaus and not go to any free credit report offer. Many times you will find that the report is not free and they do not offer your score either. They are primarily interested in upselling you into some sort of monthly credit monitoring plan.
Upon receiving your three reports go through each one painstakingly. Though much of the information is redundant you will find that each one is reflecting a different score for you. Each bureau reports based on a different matrix and many creditors do not report to all three bureaus. Take note of every late or public record on each report.
Step2: Go after it. Begin the dispute process and always dispute items in hand written letters. Though it is easier, do not use the forms provided by the bureaus. Employees at the credit repositories are trained to notice if the disputes are false or made by a credit repair company. These employees are real people handling your dispute so you are better off handling it in a personal way.
Go after all the incorrect information on your credit report. You can see a quick jump in your credit score by simply correcting false information. If, on the other hand, there are items on you report that are yours then you are better served by contacting the creditors directly. Many creditors will remove derogatory information at the request of a current client.
Step 3: Wait it out or pay it off. Something to be aware of is that almost all derogatory credit “falls off” a report after 7 years. If you have credit issues that are old you may be better off waiting for those to come off by themselves rather than investigating them. The 7 year waiting period is from the last activity on the account. I have seen credit situations that reactivated because a dispute was issued on an old item. If this happens and the item is found to be valid then your score will drop and the clock will reset for 7 more years.
One trick, so to speak, is to be sure to keep your available balances at no more that 50% and better yet 30%. You can see a quick improvement of your score if you are able to transfer a balance onto a card that is at zero and have two cards at 30% of available rather than one at zero and another maxed out.
Step 4: Be cautious in establishing new credit and especially don’t close old accounts. It’s important to know that one of the major contributing factors in your credit score is the length of time that credit has been established. Older accounts, even ones you’ve not used, will positively effect your score. Newer accounts will skew the average and lower your score.
If you’re reading this then you know the importance of maintaining excellent credit. These simple steps will help you improve or maintain your credit. Sometimes it is helpful to obtain professional help from a credit repair agency but before you spend the money these simple steps may do the trick.