June May asked:
For those who cannot afford to repair their own credit, here are some guidelines on how to do it:
1. Obtain a copy of your credit report at AnnualCreditReport.com, review it carefully, and dispute any errors that you find. It is not surprising to know that a large percentage of credit reports contain errors, as CNN Money reports. If you are having problems getting a loan, a lease, or even a job, it is high time for you to look at your report and get rid of the negative remarks that might be there by mistake. It is your right to challenge errors and you don’t have to pay for it.
2. Try to hold on to your oldest credit accounts. It has an effect on the Length of Credit History segment (which is 15%) of your FICO score. The creditors would be looking at the debt-to-credit limit ratio on your report and the average age of your accounts. They would also look at your balances, so try to reduce them to at least 75% of your available credit. This will also affect the Debt to Income Ratio (Amounts Owed) segment of your score (30%).
3. Never be late on your payments. If your report doesn’t contain any errors, paying your bills on time is the best way to improve your scores, as it affects the largest section of your FICO score, which is Payment History (35%).
4. If you can, minimize the inquiry notes on your report. The more inquiries there are, the lower your score gets. If you must give permission to a lender, landlord, or a potential employer, try to do so within a week, so they would count as just one inquiry.
5. Regarding opening a new credit account to increase your available credit. Do this only if you are planning on applying for a big loan but be warned that opening new accounts would have a negative impact on your report, at first. In the long term though, the more your available credit, the better for the New Credit segment of your FICO score (10%).
6. It is better to have different types of credit than just one type of credit. This is for the Types of Credit segment of your score (10%). For example, it is better to have two credit cards, a personal loan, a mortgage and a car note than having just 5 credit cards.
Carl
For those who cannot afford to repair their own credit, here are some guidelines on how to do it:
1. Obtain a copy of your credit report at AnnualCreditReport.com, review it carefully, and dispute any errors that you find. It is not surprising to know that a large percentage of credit reports contain errors, as CNN Money reports. If you are having problems getting a loan, a lease, or even a job, it is high time for you to look at your report and get rid of the negative remarks that might be there by mistake. It is your right to challenge errors and you don’t have to pay for it.
2. Try to hold on to your oldest credit accounts. It has an effect on the Length of Credit History segment (which is 15%) of your FICO score. The creditors would be looking at the debt-to-credit limit ratio on your report and the average age of your accounts. They would also look at your balances, so try to reduce them to at least 75% of your available credit. This will also affect the Debt to Income Ratio (Amounts Owed) segment of your score (30%).
3. Never be late on your payments. If your report doesn’t contain any errors, paying your bills on time is the best way to improve your scores, as it affects the largest section of your FICO score, which is Payment History (35%).
4. If you can, minimize the inquiry notes on your report. The more inquiries there are, the lower your score gets. If you must give permission to a lender, landlord, or a potential employer, try to do so within a week, so they would count as just one inquiry.
5. Regarding opening a new credit account to increase your available credit. Do this only if you are planning on applying for a big loan but be warned that opening new accounts would have a negative impact on your report, at first. In the long term though, the more your available credit, the better for the New Credit segment of your FICO score (10%).
6. It is better to have different types of credit than just one type of credit. This is for the Types of Credit segment of your score (10%). For example, it is better to have two credit cards, a personal loan, a mortgage and a car note than having just 5 credit cards.
Carl
