How to Improve My Credit Score

5 Tips to Improve Credit Scores

So, you have bad credit.  Every day, more and more Americans and other people from across the world are joining the bad credit club. Having a bad credit score is not the end of the world, but can feel like it when you're trying to find lending for a new car loan, a new home loan, a credit card, or anything else that depends on your credit score and rating. 

In addition, while bad credit loans happen all the time, it's the interest rate that really makes finding a loan difficult.  Sure, lenders will issue a bad credit loan, but good luck affording the monthly payments with the sky-high rates they'll give you.

If you have a bad credit rating, you really only have one choice, and that is to start improving your credit score immediately. The good news is, no matter how bad you think your credit is now, it is possible to fix your credit score. In fact, even the worst of debts, if taken care of, can be completely removed from your credit report over time. 

You may be asking, "How to improve my credit score?" or "What are some tips to improve my credit score?".   In the remainder of this article, we will discuss 5 tips to improve your credit score.

Tip #1:  Know your credit report like the back of your hand

The lenders will be pulling a copy of your credit report.  Do you know what's on it?  Do you know what your credit score is? If not, you should. If for no other reason, you should get a copy of credit report to check for errors and inaccuracies. And in general, it's always a good idea to review your credit report in detail at least once a year.

Be careful when requesting a free credit report online, as there are many companies that will try to sign you up for "credit monitoring" or other services that they offer.

Tip #2:  Report any inaccuracies on your report and get them removed

If you find any errors on your credit report, you can write to the credit report company with details on the inaccurate information.  By law, the credit reporting agency must investigate the claim.  You can usually have a decision within 30 days.

Tip #3:  Decide whether or not to use a Credit Counseling or Repair Agency

If you are thinking about using a credit repair agency to help improve your credit rating, do your homework. There are many legitimate credit counseling companies that will help you improve your credit score, but bad credit is big business, and unfortunately there are companies who will try to take advantage of those with less than ideal credit.  Even if a company bills itself as non-profit, make sure there are no hidden fees. 

If you have a company promising to remove debts from your credit report that you know are legitimate, run, do not walk, away.  The only way to remove bad information from your credit report is to let time pass by.  After 7 years or so, if you have taken care of the debt, it will be removed from your report.  There is no other way. 

Do not dismiss credit counseling as there are many reputable credit counseling agencies that can help you develop a budget and manage your money.  Just be sure to do extensive research on any company before deciding to work with them. 

Tip #4: Make ends meet.

All the credit counseling in the world is not going to help you improve your credit if you're not willing to help yourself.  The real answer to "How to improve my credit score?" is this: Get your current finances in order and keep them that way.  In time, you credit score will improve.  In more time, it can be great.

First start by determining your total net income.  To do this, simply add up your income from all possible sources then subtract your expenses.  Expenses will include your mortgage or rent, car loans, insurance payment, property taxes, utilities, food, clothing, and other items you spend on each month.  Your goal is to make ends meet. 

Tip #5:  Call your Creditors

Your creditors want you to make payments.  They last thing they want you to is default.  If you're having trouble making ends meet, get on the phone, call your creditors, and explain to them why you are having difficulties making the payments.  If you are able to contact your creditors before they turn you over to debt collection, many times they will work with you on reducing your monthly payments. 

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