The first place to start is with your credit score, this three digit number is calculated by FICO. They’ll calculate your credit score by using the information on your three major credit reports with Equifax, Experian, and TransUnion.
There’s five big pieces of data that will determine your credit score, this includes your payment history which is about 35% of your overall credit score. Along with your amounts owed which is a another 30% of your credit score.
The remaining three items are the length of your credit history and specifically each account, how often you’re applying for new credit, and the types of accounts you have. These last three items are factors that you have much less control over and with normal activity, this shouldn’t be a place to invest your efforts.
It’s wise to focus on your payment history and your amounts owed. These are the two big swingers, when your credit score is calculated. In this article we’re discussing three ways to raise your credit score and specifically two monumental factors to improve credit rating, and earn an accurate representation of your true credit worthiness.
1. Payment History
Naturally, by making on time monthly payments with your current lenders and creditors you’ll be building credit, and you’ll be creating a trail of on time payment history. Many folks suffering with less-than-perfect credit will often turn to credit cards to rebuild credit to help accomplish this.
There’s two objectives to focus on if you pursue this path. The first is that you must check and make sure your account will be reported to all three of the major credit bureaus, and monthly. The second is with a credit card and any revolving line of credit, you must show available and unused credit.
For example, if you have a $1,000 limit on your credit card, by having a monthly balance of about $300, you’re showing that you’re in a secure financial position. This is because you have $700 of available unused credit. If you were not in a secure position your credit card would be maxed out.
2. Utilization Ratio
Your utilization ratio is your total debt compared to your available credit. It’s normal for people to have large debts such as a mortgage, student loan, car loan, etc. Your credit score won’t be dictated by the amount of debt you have.
Instead, the big key here is to have available credit. This can be done with a credit card or any line of revolving credit, the secret is to make sure you have available, unused credit. This will really benefit your credit score.
3. Remove Credit Report Errors
The third and final tip to improve your credit score is to remove any questionable, inaccurate, and damaging items from your credit report. These listings are dragging down your credit score and giving it an uppercut, in the family jewels.
There’s been multiple studies including one by the FTC, Federal Trade Commission, and it’s been found that many consumers have errors on their credit reports. These errors could be easily be costing you huge sums of money in higher interest rates, along with the potential humiliation of being declined for new credit.
You’re entitled to a copy of your credit report from all three of the major credit bureaus, Equifax, Experian, and TransUnion. You can get a copy once every 12 months. You can request this by visiting annualcreditreport.com and we encourage you to stagger your requests.
To clarify get your Experian credit report, and wait four months then get your Equifax report, then four months later get your TransUnion credit report. This way you can keep a close eye on the information that’s being reported about you, and determining your credit score.
The Fair Credit Reporting Act (FCRA) gives you the right to dispute any item on your credit report that you believe is inaccurate. This law is passed for your protection and in an attempt to keep your credit safe. A little known truth is that the debt collection agency regularly breaks the law, and federal regulations.
One of the many ways is they’ll often report debts, much longer than the legal time frame. It’s also rarely discussed that the FTC has find all three of the major credit bureaus, and multiple times for allegedly violating consumer rights and not complying with the FCRA. This law requires the credit bureaus to investigate consumer disputes, and more than a few times the credit bureaus have settled allegations with the FTC, about them avoiding consumers disputing credit report information.
This is why many people believe it’s impossible, or illegal to have information removed from their credit reports. They’re unaware the credit bureaus are for profit businesses. This means when they comply with federal law and regulations that say they must investigate a consumer dispute, they’re spending money. This money is otherwise profit.
This is why many critics believe the credit bureaus all to commonly, decide a vast majority of consumer disputes are invalid, so they can avoid the expense of conducting an investigation. Someone in politics since the initial passage of the FCRA, decided it would be a good idea to allow the credit bureaus to decide if your dispute is valid or invalid before the credit bureaus have to investigate and spend money, complying with the initial law.
The cold harsh truth is the credit bureaus want to frustrate the consumer, and in hopes of them just giving up, and living with bad credit for seven to 10 long years. It’s wise to turn to a professional credit repair company and get help if you’re determined to get on the road to good credit.
Please, focus your efforts to clean up credit report items and remove the negative listings. This is what’s bringing down, and lowering your credit score. The most efficient path to fix credit score is a simultaneous two pronged approach, because you’ll also need to build credit by demonstrating responsible use, and having available unused credit.
Repairing credit doesn’t happen overnight, but you don’t have to suffer through seven to 10 long, embarrassing, and expensive years. Keep in mind every law is passed to protect you, and your credit. And just as we take our car to a mechanic, it’s wise to get help with credit repair professionals, who knows these laws inside and out.
One of the best credit repair companies, who we encourage our members to consider are The Credit Pros. Because in 2016 alone, over 9 million negative items were successfully removed from consumer’s credit reports. This includes late payments, collections, charge offs, judgements, liens, and many more derogatory credit report items.
Get a free credit consultation with a certified FICO professional by calling toll-free 1-877-418-7596. And for more tips, techniques, and strategies about how can I improve my credit score with Dan Willis, sign up for our free newsletter and join our congregation.
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