Taking Steps to Repair Your Credit

Last week’s blogs discussed the importance of your credit score
and explained how
it is calculated.  See
blog.  This week’s blog will give you some tips to improve
your score, but there is no quick fix, as restoring your credit
takes time and patience.   

When taking steps to improve your score, first, you need to
check your report.  If you have not done so already, order a
free copy of your report from annualcreditreport.com.  As explained in
several
previous posts, the Fair Credit Reporting Act (“FCRA”) entitles
you to one free copy of your report a year, so use it!  Your
report contains all of the information used to calculate your
score, so you need to know what is on it before determining what
needs to be done to improve it.  Check to make sure your
report contains only accurate information, positive or negative,
and if you find errors on your report you can dispute the
errors with the credit
reporting agencies (“CRAs”). 

The next step to improving your score is making an effort to
reduce your debt, obviously a task easier said than done. 
Make a list of all of your outstanding debt, compare balances and
interest rates and determine which accounts can be paid off and/or
closed, effectively raising your credit score.  Too many open
accounts will reduce your credit score and cause financial strain,
while on the contrary, paying off debt and closing excess accounts
will raise your score and relieve stress.  Try to determine a
payment plan on accounts making it easier to pay off excessive
balances and organize your finances.  Always try to make more
than the minimum monthly payment on accounts, which will quickly
reduce your balances and raise your score faster as a
result.   

A simple way to improve your credit score is to make timely
payments on your accounts.  Payment history accounts for as
much as 35% of your score and late payments will weigh down your
number.  Delinquent payments, even if only a few days late,
and collection accounts negatively impact your score.  
If you missed payments, get current and stay current.  The
longer you continue to make timely payments, the more your score
will continue to increase. The older a negative account is, the
less it impacts your score.  It is important to note that
paying off accounts or making timely payments will not remove the
delinquent history from your report but will improve your score
moving forward.   

One way to ensure timely payments, is to set up monthly payment
reminders.  This can either be a simple alert or an automatic
withdrawal.  There are several online programs that allow you
to set up automatic withdrawals for your accounts or email
reminders to make your payments.  Another way to improve your
credit score is to reduce the amounts owed on your balances. 
This category makes up 30% of your credit score.  Keeping your
credit card balances low is an easy way to drive up your score but
requires a conservative approach to your finances.

For more information on your credit
score or assistance with credit report problems contact SmithMarco P.C. for a free case review.