tipThe most basic fundamental of credit repair is knowing your credit score. It is more important to know what affects your credit score. And even more essential than that is knowing what you are able to do to improve your credit score.
Article resource: Know your credit score, and take steps to raise the number by Personal Money Store
It is free to get your credit score
Thanks to financial reform, doing something about your credit score is easier than ever. Free credit report services are advertised all over the internet. Until now, those free credit reports didn't contain your credit score. Paying for that was extra. But part of the most recently passed financial reform bill ensures that you can get a free credit report that contains your credit score once per year.
Credit score low?
When it comes to credit repair, many people do not know how they affect their credit score. For instance, Wallet Pop reports that many people assume if they pay their bills on time, their credit score is good. Even if you always pay on time, when your credit cards are maxed out, your score is lower than it should be. Seeing borrowing to the limit shows risky behavior. When improving credit score, your first priority is tackling excess credit card debt.
Credit repair has you pay down credit cards first
To raise your credit score, you should pay off credit card debt first. There are two basic types of debt. Installment debt is secured by a lot of collateral, like a car loan. Your credit card balances are revolving debt. Credit card can revolve forever which isn't really good. Since credit card balances appear to be unsecured, credit report companies like FICO say they're more risky than payday installment loans. So paying down your credit cards will do more to raise your credit score than paying down your car.
Pay off collection agencies last
Your score is already hurt if you've been taken to collections. Paying the collection agency won't change the numbers. According to Bankrate.com, by the time your debt goes to collection, your creditor has already written you off. Although paying the collection agency will end the harassment, the payment won't erase the delinquency from your credit report. Bear in mind that a surprise call from the collection agency may actually result from missed payments on anything from utility bills to library fines. The key to safeguarding your credit score is to stay away from collection within the first place.
To charge cards, say no
To keep your credit score from dropping, keep refusing that charge card every department store tries to sell you. Your credit score can be lowered by opening and closing credit accounts. Wallet Pop said FICO credit bureau research has found that opening any type of credit account is automatically seen as more credit risk. If you do get that charge card and pay it off in full, your credit score will rebound in a few months, but it won't rise above the level it was before you bought that new outfit.
Credit cards not cancelled
When considering credit repair, the deck is typically stacked against you. Especially when it lowers your score to cancel credit. When canceled, the line of credit with credit cards goes away. With less credit available, your credit score goes down. Just zero the credit card out and put it inside your dresser instead. New credit card rules prohibit credit card companies from canceling cards you don't use so you do not have to worry about that anymore.
Make an effort to use short term loans wisely
Taking out an short term loans for credit repair is risky, but it can work to pay back credit card debt with personal discipline. If you've a bunch of maxed out credit cards, the new installment loan won't negatively impact your credit score as much as those debts. For this strategy to lower your credit score, you've to make yourself pay down the credit card debt with the short term loan, and throw the credit cards within the drawer until the short term loans is paid off.
Find more information here:
Wallet Pop
walletpop.com/blog/2010/07/07/good-credit-score-secrets/
Bankrate.com
bankrate.com/finance/debt/3-easy-ways-to-rebuild-your-credit.aspx
