Throughout my journey of trying to fix my credit… I’ve found that there are several different things you can do to raise your credit score.
Believe me… my credit score was in the pits. When I was starting all of these different businesses… I maxxed-out a ton of different credit cards that I simply could not pay back.
I tried to avoid the situation for the longest time… but finally I decided I needed to do something about it. So that’s when I decided to start researching the different things I can do to get back on track and improving my credit.
When people talk about credit scores… they’re usually referring to your FICO score which is just the initials of the company who created the system for rating your credit.
A lot of creditors will use your FICO score as a starting point to determine whether or not you are credit-worthy… but it’s not the only thing they look at. Some other factors lenders look at is how long you’ve lived at a particular address or… how long you’ve been working at your current job.
Lenders like to see consistency… because if you are consistent with where you live… and consistent with your job… then they feel you have good habits and can be trusted with paying back your loan.
However… if they see you’re constantly moving… constantly changing jobs… the erratic behavior may raise red flags that you are unreliable and that could affect how you deal with paying off the loan they may potentially be giving you.
So keep these things in mind.
When lenders look at your FICO score… you’ll have a rating between 300 and 850. Anything below the score of 700 may tell the lender that you may be a risky investment. The lower your score… the higher your interest rates will be. Likewise… the higher your score… the lower your interest rate will be.
That’s why one of the very first things I mentioned in a previous blog post is to get check your credit report to make sure everything is accurate. You can get one free credit report for the 3 different agencies that track your credit every year by going here:
Don’t pay for a credit report… you can get a copy for FREE by going to the site above.
When you get a copy of your credit report… make sure you review it carefully. If you see any errors… make sure you contact the credit agencies right away to remove the errors.
Also beware of how many accounts are opened and check your address. If you were a victim of identity theft… many times the thieves may have tried to open up various different accounts with your name and identity.
If you see this on your report… make sure you correct it as soon as possible.
Once you understand what is showing up on your credit report and you confirm that everything is accurate… next thing you need to do is begin to establish a good credit history.
Here are some things you need to start doing right away to begin building up your credit:
#1) Pay your bills on time. This is probably the number 1 thing that creditors put the most weight on when determining your credit score. Are you consistently paying your bills on time… or, you are always paying your bills late.
If you pay your bills on time… this will dramatically give you the single biggest boost in helping you improve your credit.
#2) The next thing creditors look at is how much you owe. If you’re like me and you maxxed out a dozen different credit cards… this will negatively affect your credit. So what you want to do is begin to put a plan into place to start paying down your debts one at at time starting with the highest interest rate debt first.
As you slowly begin to pay down your debts… this will help you improve your credit score.
#3) Lenders want to see your track record with credit. If you only have new established credit… this can hurt against you. If you have older credit cards that you established long time ago and have consistently paid down… that looks much better in the eyes of a creditor because it shows what you’re habits around credit are over a longer period of time… which gives them a better indication of what kind of credit habits you’ll have going into the future.
These are some simple tips you can begin applying to your financial habits right away… and if you stay consistent… all of these things can lead to helping you improve your credit score rating and help you fix your bad credit.