4 Steps to Improving your Credit Score

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: Determine what you have that needs to be fixed. You will want to go directly to the sources of your credit and get your reports from www.equifax.com, www.transunion.com, and www.experian.com. These are the bureaus that your creditors report to and it is important to see exactly what items are either incorrect or derogatory.

Order your reports AND scores directly from the bureaus. Don?t waste your time dealing with one of those companies offering you a free report. What you will find is that the reports are NOT free and what they are after is setting you up on a monthly pay plan to monitor your credit.

When you receive your three reports take the time to review each one individually. Each credit repository reports your score based on a different matrix and some creditors do not report to all three bureas. Make note of any item that is reflecting as late or is listed as a public record.

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 rreport 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.

Another thing you can do to improve your scores immediately is to pay down current credit items such as credit cards with higher balances. A good rule of thumb is that your balances should be no more than 50% of your available credit and preferable as low as 30%. If you have one card with a zero balance and another with a higher balance then you are better off transferring a part of that balance to the free and clear card.

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.