Credit repair scams are a dime a dozen. Beware of advertisements for credit repair that promise massive increases in your score in a short period of time. Credit repair takes strategy, patience and an understanding of the components that make up your credit score. If you remain consistent in your credit building techniques, your score will increase over time.
Getting Started
Order a copy of your credit report and score. Your credit report contains a record of your past and current accounts. Since credit reports may contain errors, it is essential to review your credit report before attempting to repair your credit. You can obtain a free copy of your credit report if you have recently been denied credit or employment based on information in your credit report (see Resources). However, free reports do not contain your credit score.
Dispute Any Errors
If you find incorrect information in your credit report, you can dispute the information to have it removed. There are multiple ways to contact the credit bureaus to have an error removed. Contact the bureaus by phone, mail or online to submit your request for removal. With your dispute online, you can identify the reason you want the item removed from your credit report and dispute multiple items at once.
The creditor has 30 days to respond with proof of the account information included in your report. If the creditor does not respond or provide adequate documentation of the claim, the item is removed. The more negative errors you have removed from your credit report, the more your credit rating improves.
Boosting Your Score
Once your credit report is examined and updated, work toward bringing all your credit accounts current. Payment history is the largest factor affecting your credit score. The second is amount owed. Work toward reducing the balances on your credit accounts with large, consistent payments until the balance falls below 30 percent of your available credit.
Payment history and amounts owed make up for 65 percent of your score when combined. The third-largest factor is the length of your credit history. This factor makes an overnight fix impossible but means you are rewarded for your consistent efforts.
Strategizing for the Long Term
Your credit rating is determined by your level of risk as a consumer. A bad credit rating means you are a high risk for creditors. Understanding how to borrow responsibly can help you maintain a good score once your credit rating increases. Responsible borrowing generally means using as much credit as you can afford to repay in a short time frame. Avoid the temptation to make only the minimum payment on large balances. Instead, aim to pay off balances within a few billing cycles.
Once your score improves, consider getting an installment loan such as a mortgage, personal or car loan if you do not already have one. According to MSN Money, installment loans and credit cards provide the opportunity to create the fastest improvements in your credit score.
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