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Summer credit score improvement tips

Summer credit score improvement tips

There are only two things in life that are guaranteed: death and taxes, but your credit score is also subject to this adage.

You need a good credit score to get approved for a loan and earn cheaper interest rates whether you need a car loan, home loan, or greater purchasing power.

I realise that you frequently avoid talking about it, but if you take tiny measures and don’t avoid your credit score, it might be simpler than you think to raise it.

Here are 5 strategies to help you raise your credit score

1. Don’t Avoid Your Credit Report

Experian, Equifax, and TransUnion, the three major national credit bureaus, are required to provide you with one free credit report each year. Make sure to order your report and review the contents when it arrives. There may frequently be mistakes on your report lowering your credit score. Verify that no incorrect late payments, debts, or credit limits have been recorded. Your credit score, which is based on data from your credit report, is significant in determining which loans you qualify for and the interest rate you will pay.

A few months before making a significant purchase, such as a home or car, get a copy of your credit report. Additionally, if you have any minor unpaid debts, such as copays for medical bills that frequently appear on credit reports, contact the medical service provider or collection agency to pay them off right away and request that they be taken off your credit. You’d be shocked at how much your score can be lowered by a few unpaid $10 co-pays.

You may see your credit report for free through Mint in addition to getting a free credit score from one of the three credit bureaus. With Mint’s free credit report and score, all you have to do is confirm your identification. After that, you’ll have your free credit report summary in a matter of minutes.

2. Pay Down Credit Card Debt

One of the main things that might lower your credit score is credit card debt and maxed-out credit cards. Your credit score suffers the more revolving credit you use as a percentage of available credit. Maintain your outstanding balances at no more than 30% of your credit limit, and ideally no more than 10%.

If you owe a lot on your credit cards, make a list of them and pay off the lowest balance first before moving up to the highest. You can use the money you would have spent on the lower accounts you have just paid off against the next highest balance as you pay off the lowest credit card debt. The debt snowball approach, a technique you may use to reduce your debt and raise your credit score, really works. Don’t close your credit cards after you’ve paid off your credit card debt because doing so can harm your credit score.

3. Request Removal of Late Payments

Call the business that reported the late payment and ask them to remove the negative record if there is an outstanding debt that was incorrectly reported or if you actually forgot to pay a bill. The creditor will ask for a letter outlining the reasons you were late or the error. If they decide to delete the negative information, they will inform you.

Always seek a written confirmation of permission for your request, and keep it for your records. I can’t even begin to tell you how many clients I’ve assisted with their credit who went to buy a property and discovered an old negative item that had previously been eliminated had returned.

4. Don’t Clear Up to Charge Up

Don’t spend all that time repairing your credit and raising your credit score in order to receive that long-awaited approval for a home loan only to make a sizable purchase on credit later.

Lenders base their decisions on your credit score and report when you apply, but they will run your credit report once more after your loan is approved, but right before your deal closes. A sudden new purchase can have an effect on your financing. After I assisted one of my former clients in repairing his credit for his home loan, he went out and bought a brand-new Corvette. Right before the loan closed, the lender ran his credit, changing his debt-to-equity ratio and having an influence on the deal.

5. Improve Your Payment History

You could be having trouble paying your expenses as a result of all that has happened over the past two years. Call your lender or credit card provider right away to let them know about any difficulties you are having. The best course of action is to start making on-time payments to your creditors if you had problems and missed or made late payments. Your credit score will rise the longer you pay your bills on time after being late. The recent positive payment trends will eventually outweigh the negative ones.

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