Monitoring your credit score is an extremely easy and important thing you can do to assure your current and future plans involving money transfer of any kind are safe. Less than two years ago, I lapsed on a credit card payment for no other reason than deciding not to open up a credit card statement that I assumed would contain a $0 balance since I had not used the card in well over a year. Unfortunately, I had forgotten that I used that credit card to purchase (how ironic is this) a CREDIT SCORE MONITORING SERVICE a year and a half before that had a yearly recurring fee if left not cancelled. I never used the service after the first week of purchasing it and I forgot completely about its existence.
My score dropped from the low 700's to 570 because of my 60 day late payment. I should probably be happy I discovered I had a payment to make on my own rather than through the receiver of my telephone with a collector on the other end of the line.
There I stood, a 570 credit score, over $5000 in credit card debt, and I actually wanted to invest in real estate. That was why I finally decided to check my score in the first place. I wasn't going anywhere with that score, so I started looking for ways to fix it.
The most obvious thing that came to mind after my search was that I should do whatever I could to pay off that $5000 in credit debt. But I had no money. I deciding against trying to take out a personal loan from a bank since I had terrible credit to begin with. That left me with the solution I dreaded most, borrowing from family and friends.
Before you close out this article while saying to yourself that you could never stoop to such a level, let me just remind you that the reason you are reading this in the first place is because you are looking for a way to fix your credit. I swallowed my pride and borrowed $5000 from a variety of sources close to me in order to pay off my credit debt. I made plans to pay these people off within 6 months, despite the hardship that would place on me. Honestly I wasn't even sure it would help my score much, but even if it didn't, I knew it would be better than having all that debt on my record. I couldn't believe my eyes when I checked my score the following month.
654. Then the next month, 672. Now, 6 months later, it stands at 710. All I did was get that credit card debt off my credit report and transfer it to "private" lenders, namely those close to me who were willing to help. Reducing your credit utilization (how much you owe vs. the total of your limits) is the absolute best way to get your credit recovery plan off to a great start. Do whatever it takes to get your credit cards paid off, and you will reap the benefits in the very near future.
The steps to correcting a bad credit report are not difficult. Because it is essential to have good credit, you must systematically take measures to notify the credit bureau of an error and then provide evidence. This way, the credit repair process can go smoothly.
1. You are entitled, under the Fair Credit Reporting Act (FCRA), to inform the credit bureau about inaccuracies in your credit report. It could happen that the error was not intentional. One possible explanation is that you have a very common name - John Smith as an example. Do you know how many John Smiths there are in your state alone, not counting the 51 other states? If a John Smith from the same state you live in misses a loan payment, that omission could be entered under your name. If you have proof that you, John Smith, did make the payment, you can advise your credit bureau that they made a mistake.
How do you inform the credit bureau about this error? Send them a letter. Enclose whatever proof of payment you have. Then wait for them to rectify the error. If you don't hear from them, follow-up. Just because no news is good news doesn't mean they've corrected the error.
If you're curious as to what your credit score is, you can go to the FICO web site. They give out credit scores consisting of three digits. If your score goes above 720, you're in great shape! If it's under 720, you need to do something about it to get it higher. Don't let a low credit score get you down. Just think -others are also struggling with low credit scores; at least they're doing something about it, and so should you!
You can get an idea of the type of interest rates you'd be charged based on your credit score. The FICO web site has a section on interest rates. This is what we found: supposing you had a good credit score (720 and up) and you wanted to apply for a home equity loan, term 15 years. If you were looking around December 2007, the applicable interest rate would have been 5.799%. That rate jumps to 10.44% if your credit score was around 500-579. See how a good credit score can help a lot?
3. Time, patience and discipline can you get you back on track when it comes to your credit score. If you blame yourself for your low credit score, stop it. Everyone makes mistakes. Instead of agonising over your score, take steps to fix it. While you're fixing it, make some effort not to touch your credit - if you have an emergency, then use it. Second, if you do use your credit, make sure you do so with lots of restraint. You also need to do these to get your credit score back in good standing.
do not apply for additional credit while your credit score is still at the "iffy" stage - each time you apply for credit, this gets registered in your record;
pay all your bills on time - it's very tempting to skip payments because people know they won't get thrown into jail for one or two skipped payments. But think of it this way: a skipped payment will lead you into a situation where you'll feel trapped and be cash-strapped. That's almost the equivalent of remaining in a locked cell;
like everyone else, you have a limit of how much you can use from a revolving line of credit. If your bank offers you say, overdraft protection of up to $1,000, stay within that limit;
consider debt consolidation - if you're feeling choked by a whole slew of interest rates, ask your financial adviser if it makes sense to consolidate all your loans. That way you pay one loan with one interest rate;
why not pay cash for everything you buy from now on? Keep that credit card at home so you're not tempted to reach out for it;
develop good relationships with the money people - your banker, your credit union, and your mortgage company. Build goodwill and rapport. If you demonstrate credibility, your banker or mortgage lender might be willing to ignore one bad entry in your report.
If your credit score is unsatisfactory, roll up your sleeves and get it higher. Getting your credit score up to par should be your # 1 priority. Good credit is as good as gold. Contact your credit bureau immediately if you notice that your credit report contains inaccuracies.
Don't stop until the errors are corrected. Be persistent and do the necessary follow-ups.
Both Ken Mohn & Steven J. Talrechi are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Ken Mohn has sinced written about articles on various topics from Free Credit Report Score. Ken M. is an avid credit card information advocate and operates a credit card marketing site at .. Ken Mohn's top article generates over 1300 views. to your Favourites.
Steven J. Talrechi has sinced written about articles on various topics from Bad Credit Loans, Credit Card Offers and Free Credit Report Score. Steven J. Talrechi has been studying credit reporting and credit report trends for the last decade. He is interested in helping individuals obtain a . Steven J. Talrechi's top article generates over 14800 views. to your Favourites.