Cori Scherer

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5 Ways To Improve Your Credit Score

I’ve been talking a lot about finances, credit, and tips to save money recently.  Call me crazy, but the topic excites me, and I think integrating it into my umbrella of overall health is SO crucial.

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A credit score is more valuable than

we realize

. It’s a way for other potential investors (

banks, lenders, etc.)

 to view your past and current payment histories, and a good credit score can open doors for you. Whether you’re in the market to lease a car, rent an apartment, or purchase a new electronic, your credit affects your financial well-being. 

We all want to know (and

should know

)

how credit works and how it’s determined. Here are some helpful

and simple 

ways to improve your credit over time.  

And if you’re reading this thinking “Mine’s already so bad, it’s too late” or any other doubtful, pessimistic thought…STOP.  It’s not too late to improve, so just keep reading!

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Get a copy of your credit report

Before you even begin to work on your credit score, you need to know where you currently stand and the areas you need the most improvement. A good place to start is looking at your credit report to view all your activity including bank cards, auto loans, mortgages, and more. You’ll be able to see all your revolving accounts, installment loans, payment histories, open and closed accounts, and recent credit and loan applications. Under federal law, you are allowed one 

free credit report

 every 12 months,

so take advantage!

Report errors and explain yourself

Once you’ve received your credit report, be sure to go over it thoroughly in case you discover any mistakes that could’ve been made. If your credit report isn’t accurate, you have the right to 

dispute errors

 by contacting the credit bureau or the point of contact who listed the account of your credit report. A study by the U.S. Public Interest Research Group found that 79 percent of credit reports had a mistake which led to credit denial. It’s also always a good idea to explain your situation if you feel your credit history doesn’t show the entire story. You can write 

a letter explanation

 of 100 words or less of extenuating circumstances that can help

in your favor.

Apply for a personal loan

A good way to boost your credit score is by taking out a personal loan. When your credit cards are maxed out or you’re dealing with high-interest rates, a personal loan can help consolidate debt. A personal loan is an installment loan, so whatever debt you have on that specific loan won’t hurt your credit score as bad as a credit card that’s almost to its limit would. Personal loans have 

lower interest rates

 than credit cards, that typically range from 10-20% or higher. Whether you’re paying off existing high-interest debt with a lower-interest personal loan or you’re combining multiple debts into a single repayment to keep things manageable, 

applying for a personal loan

 might be in your best interest.

Pay your bills on time

The best way to start build

ing

your credit is by paying your bills by the due date and

always

making a payment, even if it’s the minimum due amount.

I’ve had SO many conversations with friends and others who don’t realize how necessary this is.  Do NOT skip a payment…ever.

This means credit cards, parking tickets, rent, gym memberships, etc. Setting up automatic payments is a smart way to never accidentally forget about a bill and avoid late or overdraft fees. Your payment history accounts for 

35% of your credit score

 and

it’s determined by the size of the late payment and the length of time it’s been overdue

Be smart about what bills you pay first by paying ones you can pay in full, ones that have been overdue for the longest amount of time, and ones with the highest interest rate.

Beware of scams

The FTC has acknowledged that many 

scam companies

 claim they will promise to clean up your credit reports. Be careful on these sites because there are many credit-repair scams that specifically target consumers with poor credit. 

Some of these claims include removing negative information from your credit report or requesting a service fee upfront before anything is even done. Only

time and a personal debt repayment plan

will improve your credit. If you feel lost or overwhelmed by your credit situation, there are always great resources such as seeking professional assistance.

Find

a trustworthy and 

credible credit counseling agency

 for guidance.

The length of time it takes to rebuild your credit score depends on the reasons behind the change.

Consistently

check your credit report and credit score to make sure you’re always up to date. In the meantime,

get it together, hold yourself accountable,

 and start paying off your bills and spending credit responsibly. 

It’s a process

and might seem complicated, but start small and take care of the basics to balance out.  

Once you get back on track, your credit score will reflect

a more financially heathy and responsible you.

Read some of my other tips to stay on top of your finances 

here

!

xx