Take steps to raise the number after finding out your credit score

Posted by marian on 08/11/2010

Knowing your credit score is the most basic fundamental of credit repair. But it is even more significant to know what affects your credit score. And even more essential than that is knowing what you can do to improve your credit score.

Article source: Know your credit score, and take steps to raise the number by Personal Money Store

Your credit score is free

Doing something about your credit score is easier due to a financial reform. Free credit report services are all over the internet. Until now, those free credit reports didn't consist of your credit score. You had to pay additional for that. But part of the financial reform bill ensures that you can get a free credit report that includes your credit score once per year.

Credit score low?

A lot of people don't know how they affect their credit score. For instance, according to Wallet Pop, many people assume if they pay their bills on time, their credit score is good. The truth is, when your credit cards are maxed out, your score is lower than it should be. When credit bureaus see borrowing to the limit, they see risky behavior. When improving credit score, your first priority is tackling excess credit card debt.

Credit repair - settle credit cards first

To raise your credit score, you need to settle credit card debt first. There are two types of debt. Installment debt is secured by collateral, like a car loan. Revolving debt consists of credit card balances. It isn't good when credit card debt revolves forever. Since credit card balances appear to be unsecured, credit report companies like FICO say they're more risky than installment loans. Paying down credit cards is going to do more to raise your score than paying off your cars.

College agencies should be paid off last

Unfortunately, if you've been taken to collections, your credit score is already hurt. Paying the agency won't change any of the numbers. As outlined by Bankrate.com, by the time your debt goes to collection, your creditor has already written you off. Although paying the collection agency will end the harassment, the payment won't erase the delinquency. Remember that a surprise call from the collection agency can result from missed payments on anything from utility bills to library fines. Avoiding collections will protect your credit score.

To charge cards, say no

To keep your credit score from dropping, keep refusing that charge card each department store tries to sell you. Opening and closing credit accounts will lower your credit score. Wallet Pop explained that FICO credit bureau research has found that opening any type of credit account is automatically seen as more credit risk. If you do get that charge card and pay it off in full, your credit score will rebound in a few months, but it won't rise above the level it was before you bought that new outfit.

Don't cancel any credit cards

It looks like the deck is stacked against you when it comes to credit repair. Especially when it means cancelling credit will lower your score. The line of credit carried by a credit card goes away when canceled. With less credit accessible, your credit score goes down. Instead of canceling, just zero the credit card out and throw it with your dresser drawer. New credit card rules prohibit all of the credit card companies from canceling cards you do not use--which used to hurt your credit score--so you don't have to worry about that anymore.

Wisely use installment loans

Taking out an short term loan for credit repair is extremely risky, but it can work to pay down credit card debt with personal discipline. For those who have some maxed out credit cards, the new short term loans won't negatively impact your credit score as much as those debts. For this strategy to lower your credit score, you have to make yourself settle the credit card debt with the payday installment loans, and throw the credit cards in the drawer until the installment loans for bad credit is paid off.

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Wallet Pop