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Raising Your Credit Score

At one point or another, a fair number of people find themselves with a lower credit rating than they would like.  Perhaps they lent money to the kids for a down payment and spread themselves too thin, neglected to pay certain bills on time because funds were tight, or were stricken with an illness and medical costs kept climbing.


Fortunately, there are ways to increase an unimpressive credit score, but it usually takes time (incidentally, FICO score is the most recognized model used).  Here are a few ideas.


Be sure to send in bill payments before the due date.  Some people forget about bills until they are due.  Afterward, they figure they’ll just catch up the following month.  Yet, when this happens, late fees and less-than-stellar ratings accrue.  In fact, payment history figures prominently in credit scores: 35% of the FICO score is based on this component.  Therefore, if you regularly find yourself behind, set reminders on your smart phone or write “payment due” on a calendar you frequently check.  If you still tend to be overdue, then set up an automatic withdrawal plan through your bank.  As long as the funds are available, you’ll consistently be on time.

Ask a creditor to reduce debt.  Let’s say someone stumbled upon hard times, perhaps because of sickness or job loss, and fell behind in credit card payments.  A few late-payment notices went out, and the delinquent amount ended up in collection.  You can call the credit card company and request the debt, or at least a portion of it, be forgiven.  When extenuating circumstances exist, this option is not out of the question.  If pardoning the debt is not going to happen, then consider asking the creditor to renegotiate the interest rate (credit card interest rates can be quite high).  Once a few on-time payments are made, kindly request the past-delinquency information become removed from credit reports.

Keep a couple of credit cards, but use them carefully.  Upon reclaiming a degree of credit score footing, some people make the decision to close all their credit card accounts.  However, the action can actually lower your credit score.  What should you do?  Maintain a credit card or two and periodically make small purchases.  After that, promptly pay the items off.  Your account will show activity, and your payment history will indicate timeliness.  The longer you demonstrate a chronicle of on-time payments, the greater the probability your credit score will increase.  But you don’t want to pull out credit cards anymore?  Then consider authorizing your credit card company to automatically deduct newspaper bills or other monthly charges.  Just think, you can keep your plastic tucked away.


A lower-than-you-would-like credit score can be especially troubling.  Thankfully, there are workable ways to help improve the situation.  For additional suggestions relating to this topic, go to http://www.myfico.com/crediteducation/improveyourscore.aspx

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