How To Improve Your Credit Score

How To Improve Your Credit Score

Improve Your Credit Score – 5 Myths Put to Rest

Most of us have a moment where we stop and wonder, “What can I do to improve My Credit score?†It’s an excellent question, but it’s only half the issue. There are two parts to maintaining a good Credit Rating. They are the things you need to do and the things you should never do.

 

Most consumers don’t have a clear base of knowledge about their credit. They take advice from the self proclaimed financial expert who pontificates around the water cooler at work or from the brother-in-law that knows a guy who knows another guy whose brother knows everything about money matters. Folks, this is a recipe for disaster.

 

Let’s examine some of the most common misconceptions people have regarding their Credit Scores.

 

1. Getting My Credit Score Will Hurt My Credit – This is simply not true. There are two types of inquiries to a person’s credit score, known as the FICO score. They are called soft inquiries and hard inquiries. Soft inquiries will never adversely affect your credit score. Hard Inquiries may or may not. Checking your own Credit Score Is considered a soft inquiry and will not affect your credit score.  A lender making an inquiry before issuing you credit constitutes a hard inquiry. If the lender disapproves your application for credit it will count against you.

 

1. Paying Off All My Debts Will Instantly Improve My Credit Score – Not only is this untrue, the exact opposite can occur. A large factor in your credit score is the difference between your available credit and how much you are actually using. Eliminating accounts reduces the amount of your total available credit. This gives more weight to your outstanding balances, which can negatively affect your credit score.

 

 

1. All Credit Reports Are Alike –Not true. The three main Credit Bureaus (Equifax, TransUnion and Experian) do not share all the same databases. It is not unusual to find one listing an entry the other two don’t have. Many people think as long as they get a clean bill of health from one of the three, everything is fine. Not so. A word to the wise; if you are checking your credit score because of something important like applying for your first mortgage, get your report from all three. This gives you a chance to fix errors before a lender sees them.

 

 

1. High Credit Card Limits Will Hurt My Credit Score – Not true. Having a lot of available credit can be a good thing. As I mentioned in number 2, the important thing is the balance between your available credit and what percentage of it you are using. If you have $100,000 of available credit and are $95,000 in debt you are in bad shape. On the other hand, if you have $100,000 of available credit and are carrying only $5000 of debt you are in an enviable position.

 

 

1. The Information on My Credit Report Cannot Be Changed. It Is Carved In Stone And I’m Totally Screwed – Again, not true and I wish I had a dollar for every time I’ve heard this one. You have a legal right to have inaccurate information removed from your credit report. This is the main reason to Get Your Credit Report from each of the big three credit bureaus. It is amazing how many things are wrong on these reports. Always correct errors on your credit report, unless of course, the error is in your favor.

 

 

Remember, there are two aspects to maintaining a good clean credit rating. You need to do things that will be good for your credit and not do things that will harm it.

 

I hope this myth busting helps.

About the Author

Daniel Lynch is an entrepreneur and author. He has written articles covering a wide and varied range of topics including firearms, women in the U.S. military and animal behavior. He recently published his first novel, APACHE SUNSET. His current area of interest is how little the American people know about credit. He is determined to change that. He has just secured the distribution rights to an e-book titled “Credit Secrets Revealedâ€, a consumer guide to the complex world of credit.
Information about this book is available at http://www.productsupplycenter.com/web61615

Typically, how long does it take To Improve Your Credit Score?

First of all, to correct a posted answer, Bad Credit, credit that has gone to collections, or charged off accounts stay on your credit report for a period of 7 1/2 years and the start date is NOT after you pay it off, the start date is from the last missed payment. This is per Running of Reporting Period - Section 605 [15 U.S.C. § 1681c]

http://www.ftc.gov/os/statutes/031224fcra.pdf

As to the length of time to improve your score depends upon a lot of things such as previous payment history (if you have any late payments) the amount you owe compared to the total credit line (also known as debt utilization) and the number of accounts and how many are listed as "derogatory" (ones that are in collections or judgments awarded).

Only time will improve your score. If you were to pay off all your debts, keep your monthly payments on time and never be late and do not apply for any credit, your score will show improvements in about 2 years. 2 years is the reporting period for any hard inquiries which lower your score every time someone "pulls your credit report" to decide if you can get a new credit account. You can check your own report as often as you want as this does not count.

You can learn more if you go the site I have referenced.
Hope this helps answer your question.

Learn How To Raise Your Credit Score !

 

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How To Improve Your Credit Score

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