You may have seen ads such as: Raise credit score! Repair your credit! Fix your credit! 100% guaranteed! Such bold promises and with prices to match. However, the Federal Trade Commission (FTC) has released a Consumer Alert against fraudulent credit repair scams, asking consumers to be wary of claims like above.
Instead of relying on quick credit repair schemes to raise credit score, why not do the repairing yourself? There are many ways you can raise credit score without spending a single cent. All you need is some amount of credit score understanding and what steps are needed to maintain or build a good credit.
Improve your Payment History
The first factors included in calculating your credit score is your payment history, so it makes sense that you raise credit score by improving your payment history. So how do you do it?
Well, the answer should be obvious. Pay your bills on time. If you have missed any payments, get current and stay that way. As much as possible, don't wait until your bills are at collection. Collection accounts have a tendency to stick in your credit report. Then, you can kiss your hopes to raise your credit score goodbye.
Out of all these tips to raise credit score, the one important thing you need to remember is punctuality in making payments. That's all. Once you're passed that hurdle, then you'll have no trouble trying to raise your credit score.
Pay More than the Minimum Payments
Carrying a small revolving credit card balance is not harmful. However, if you use your credit card very regularly, it is necessary to payoff the balance periodically. The minimum payments hardly decrease the finance fees. Thus, to maintain a low credit card balance and a high credit rating, strive to pay more than the minimum payment.
Lower Amounts Owed
As a rule, credit card debts should be kept at a minimal level. Even if you pay your credit card bills on time, the way credit card companies report your balances to the credit bureau could negatively affect your credit score.
The credit card company does it once at any time of the month so if you haven't yet made your payments at the time, it's going to look to the credit bureau that you have a lot of outstanding credits.
You can't raise credit score if you keep charging numerous purchases in your credit card. Also, paying off your debt is a better option than moving it around. The most effective way to raise credit score in this area is by paying down your revolving credit. Sometimes, owning the same amount but with fewer open accounts can help lower your score.
Improve Your Credit History
A trick used by some people in order to make it appear that they have a long credit history is to open multiple new accounts. But this scheme is too risky. If you open a lot of new accounts in a very short time, this could really lower your score down and make you appear like a risky borrower.
Avoid Credit Card Cash Advances
Most credit cards offer cash advances. With this option, you may visit an ATM machine and withdraw funds from your credit account. Be aware that credit card companies charge high rates and extra fees for cash advances. In this case, minimum payments may increase until the cash advance funds are repaid.
Limit the Amount of Credit Accounts
If you have too much available credit, the temptation to spend money will arise. To avoid this common problem, avoid opening several lines of credit. If you are a student or have good credit, it is easy to get approved for a major credit card.
Although credit card companies will generously extend credit, you do not have to accept their offer. Closing a credit account may decrease your credit rating. If you are unable to exercise self-control and need to close a few credit accounts, it would be better to cancel the newest credit accounts.
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