If you have worked to clear up your credit report by paying off all of your past debts, you may be disappointed to see that your credit score has not risen the way you thought it would. Your credit score is based on several different factors, including length of accounts opened, number of accounts in good standing and whether any debts were charged off or settled.
Leave Your Oldest Credit Card Open
After paying off all your debt, you may want to cut up all your cards and close all the accounts so you never find yourself in this mess again. However your oldest credit card or account helps to establish a longer credit history, which raises your rate. Choose to leave one or two of your credit cards open, but choose the ones that have been open the longest.
Stay Current on Payments
Continue to use your credit card, but pay off the balance in full each month. This helps to improve any past mistakes because you are establishing a good credit history instead of a negative one. For your credit score to stay high, you need to continue to have regular activity on it. One way to do this is to assign a credit card to one spending category, and then track how much you spend each month. Stop spending well before you reach your limit and pay off your credit card each month.
Dispute Any Discrepancies
It may take time for all of your accounts to show up as current or settled on your credit report. Pull your credit report and check to see if you have any discrepancies on the report. If you do, contact the lender and ask it to correct the discrepancy. You may need to send in documentation supporting your claim. After you have contacted your lender, you can contact the credit bureau and have it contact the lender to double check the discrepancy.
Wait for Your Score to Improve
Bad debt marks should drop off in seven years, as will a bankruptcy. Unfortunately, you need to allow time to pass for your score to completely recover from a poor credit history. The longer you wait and work to establish a credit history, the higher your score will be. Generally, you can begin to qualify for more reasonable interest rates at about three years after working to improve your score.
0 comments:
Post a Comment