Raising your credit score may seem like an impossible task if you have bad credit. But in this post-crisis economy having good credit isn’t just a nice thing to have, it is essential if you want to get back on an even playing field with lenders. To make things perfectly clear, if you aren’t in a position financially to pay your bills on time, then you can’t improve your credit rating. Real repair on your credit score can only happen if you have a handle on your finances and enough money to cover your expenses, plus a little extra to begin paying down your debts.

Before you can begin repairing your credit, it’s important to know what can have a negative effect on your credit so you can avoid them in the future.

– Don’t max out your credit cards. Even if you pay off the balance before the due date, a maxed-out card will hurt your score because the scoring formula of credit scores is sensitive to any sign you’re getting in over your head. People with good credit tend to only use about 30% of their limit. So if you have a $10,000 limit on a credit card, try to stay below $3,000 in monthly balances.

– Don’t miss a payment. Sending in a payment a few days late usually won’t hurt your score, but it could incur fees and trigger higher interest rates. But if you miss a payment entirely you can risk taking anywhere from 60 to 110 points off your credit score. Most lines of credit have a way to set up automatic payments. Sign up for a recurring monthly payment that takes the minimum payment out of a checking account. You won’t risk late fees, and if you want, you can always pay more off that same payment cycle.

– Avoid settling a credit card debt in favor of paying off the entire debt. Opting for debt settlement may sound like a great idea, but failing to pay what you owe a creditor will take a serious toll on your credit score. It is possible to work out payment options with your credit card companies. If you have some leeway with your expenditures try to make more than the minimum monthly payment and work to bring down your credit card balance over time.

Now that you have some guidelines for avoiding negative effects on your credit, how can you work to raise your credit score? Know that you can’t expect results overnight. Credit repair is a lengthy process that can take months, if not years. And any failure on your part to stay on top of your finances can have a negative effect on your score. The following are some of the easiest ways to help improve your credit.

– Order a copy of your credit report. Every American is entitled to a free copy of their credit report from each of the 3 major credit reporting bureaus every 12 months. Knowing what’s on your credit report can help you take care of any issues before they become real problems.

– Make your payments on time. As mentioned earlier, missing payments or making late payments is one of the quickest ways to lower your score, but making consistent timely payments is one of the easiest ways to raise your score.

– Pay down your credit cards. Paying off installment loans can help improve your score, but not as dramatically as paying down or paying off revolving credit accounts like credit cards. Lenders want to see a big gap between the amount of credit you are using and your available credit limit. Try to keep your balance at about 30% of your credit limit.

– Use an older credit card. Typically most people with good credit have long credit histories. If you stop using an older card, the issuer may stop updating that account with the credit bureaus. While the account will still appear, it won’t be given as much weight in the credit scoring formula as your active accounts.

Following these simple rules can help you avoid lowering your credit score as well as helping to improve it in the future. If you are consistent with your payments and steer clear of over-spending, you will be on your way to a better credit score in no time.

Author Bio: Dee Jurgens is the head copywriter for CyberLead, inc http://cyberleadinc.com specializing in auto sales leads http://www.carcredit.com delivering quality car loans for ten years http://myfreecreditscorenow.net Providing free credit scores for you and yours free credit score

Category: Finances
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