How To Improve Your Credit Rating With Very Little Effort
15 Jan 2017
When you use credit, you are borrowing money that you promise to pay back within a specified period of time. A credit score is a statistical method to determine the likelihood of an individual paying back the money he or she has borrowed.
The first thing you need to understand is why the credit score is important?
Let’s say you are applying for a credit card or a mortgage. One of the first things the company does is to check your credit rating. Credit reporting helps stores to accept checks, for banks to issue credit or debit cards. Depending on your credit score, lenders will determine the potential level of risk you pose to them.
If you are planning to invest in real estate, a good credit score is essential when it comes to securing a mortgage. Qualifying for the best mortgage rates starts at a credit score of 740. People with scores below that threshold will likely have higher interest on their home loans.
So if your credit score is so important, what is it that you can do to improve your rating?
A little bit of planning and financial discipline is all you need to improve your credit score.
The actual process of improving your credit rating is quite straightforward. But it will take some time and you will need to be a little patient. What you need is a focused approach to improve your credit rating.
These simple steps can help you in greatly improving your credit score.
1) Get A Credit Team
It may sound quite simple. But the best way to succeed in anything is to get with a team of people to move in a forward direction. There are many credible Credit Restoration companies designed to get you on the path of credit sustainability.
The best way to build EXCELLENT credit is to know what to do, and DO IT. When you sign up with a Better Business Bureau (BBB) approved Credit Restoration Company you will have at your disposal an entire arsenal of financial and legal professionals working for you.
2) Always Pay Your Bills On Time
Ninety nine percent of the time, this is where people go wrong. Remember, you should pay all your bills and not just the credit card bills, on time. This is the fundamental building block for your credit rating. Do this right and you are well on your way to achieving a good credit score.
One sure fire way to ensure that you don’t miss any of your bills is to set up automatic payments. For many of the bills, there may be an option to set up automated payment reminders. With an automated money management program like Mint, you can get alerts sent to your inbox or smart phone.
3) Keep A Close Watch On Your Credit Reports
Look for any possible errors in your credit reports. If you notice something that’s affecting your score, get it removed immediately. This will help improve your credit rating shortly once the error is rectified.
Each of the credit reporting companies is required to provide you with a free credit report once every 12 months. You can request for your reports AnnualCreditReport.com – either in one go from each of the three companies or individually, staggered over the course of a year. If you find an error, you can easily dispute it and get it rectified.
Remember, ‘Get A Credit Team’; Financial Education Services (FES) is a US-based company that will assist you in credit monitoring, fraud-prevention, dispute negotiation, and erroneous information removal. FES is a BBB approved company designed with the specific purpose to help get people on-track to financial independence through personal credit services.
4) Know your current credit rating
To understand your credit score position, you can either get a FICO score from myFICO.com for a fee or you can check out the FES Protection Plan. Whatever additional information you can gather on your current credit rating is valuable as it tells you what to focus on in order to improve your credit rating.
5) Pay credit card bills on time and keep low balances on credit cards
As much as possible, use only a small amount of your available credit. Keep your credit utilization ratio under 30 percent – otherwise you can lose points from your credit score. You should also pay your credit card dues on time.
6) Make two payments per month
It might be a good idea to understand when your credit card company reports your payment activity to the bureaus. Once you know that you could split your monthly payment into two – one payment right before the reporting date – this will reduce the balance that is reported. Then make your second payment sometime before your due date.
Making a payment after you use your card to make a big purchase can ensure that you don’t have a high utilization ratio when your payment activity is reported to the bureaus. By paying making a payment immediately after a big purchase, you reduce the possibility of carrying a balance.
Always ensure that you cover the minimum payment due for the month. All the work you did to improve your rating will be useless if you have a late payment in your account.
Follow these simple steps regularly and you will be well on your way to getting a very good credit rating. To learn more about the credit building and monitoring services of FES visit the following link or call one of our credit specialists TODAY.