Forbes.com has posted an article with tips you can use to clean up your credit score. First, get your credit report. However, be cautious when obtaining a copy as many advertisements for a free credit report can be scams. The Fair Credit Reporting Act enables you one free credit report a year from three major agencies. You can get a report from the FCRA in as little as 60 days if you have been denied credit, are unemployed, or have been a victim of identity theft.
Next, contact the creditor and credit reporting agency if there are any discrepancies on your credit report. An official dispute should be sent to both places in writing and include things like copies of canceled checks. If the error is the reporting agency’s fault you should contact them directly.
You should try to bring your score up to the next round number, even if that is just a few points. For example, a score of 710 may be eligible for a mortgage company’s best rate, but being as close as a 705 can cost you thousands of dollars. A good suggestion is to get a credit card with a low limit. Use it to buy some things that you would normally pay for with a debit card or cash and paying the balance off each month will boost your score.
Cancelling an unused card can actually hurt your score. If you must cancel cards, keep the ones with the oldest accounts as length of time is important when determining credit scores.
…reputable sources say that canceling an unused card can actually hurt your score rather than improve it. The reason is because in the eyes of the reporting agencies, you’ll have a higher utilization ratio, or higher total outstanding credit vs. what you have available to you. You’ll essentially have the same outstanding balance as you did the day before (assuming you haven’t paid anything down), but you’ll have less credit available to you.
Before doing something major, like searching for a mortgage, you’ll want any credit repairing you do to show as soon as possible. Some lenders offer rescoring services in as little as 72 hours as opposed to thirty days. Your payment history is still the most important thing when factoring a credit score. If you’re behind on payments, do your best to catch up with the accounts you currently have and don’t open new ones.
If you have questions or concerns about your credit report, feel free to contact us through our website or by calling 205-879-2447.