Before you start shopping for a home loan or auto loan, there is one very important step you must take. You must check your credit and make sure that your record is as clean and accurate as possible. You need to give yourself time to get this done before you start shopping for loans. And that means starting probably a couple months in advance.
The very first thing you need to do is get your credit report from each of the credit bureaus. You can get this free once a year right now. Each of the companies will have slightly different information on you, so getting all of them is very important.
Check each report for accuracy. They may range from quite accurate to wildly inaccurate. People have been know to find information from completely unrelated, unknown people.
For each individual inaccurate piece, you want to write a letter to the credit bureau that has that information. Include documentation if you have any.
One of the most common mistakes is to have the same account listed two times, with the information differing just slightly. This makes you look like you have more debt than you actually do, which lowers your overall score.
Another is to fail to show when an account has been paid off. Show that the debt is paid off, and you can bring your score up a little.
For each item, the credit company that listed it has 30 days to dispute what you have said about it. If they do not, the item is corrected.
It can also be good to ask companies that you are paying regularly but not showing on your credit report to share their information with the credit bureaus. Most will do this if asked.
All of these steps are things you can do quite legitimately and without paying someone to do it for you.
The challenge, of course, is remembering to do this enough in advance to do you any good. You have to request the credit reports, receive them, find the paperwork that supports any changes you want made, then wait at least 30 days to see what happens. Obviously there is a huge advantage for those who plan ahead.
There is one final way to improve your credit score. Pay down your current debts so that you don't owe so much. Do not close the credit card accounts you pay off; long established accounts in good standing are beneficial to your credit history, more so if they are still open.
So, instead of wallowing in your pit do something about it. You have all the control in the world to improve your financial situation so start doing something about it today.
The following suggestions will give you the information you need to get started cleaning up your dues.
Tip 1. Pay Off Debt
The first thing you need to do in order to clean up is to start paying off some of that debt. You can't be debt free if you don't pay it off, so go ahead and make a plan to pay your debts.
You need to sit down with a pencil and paper as well as, your entire due accounts so you can make a list. Include how much you owe, the interest rate and the minimum monthly payment.
Doing this will give you an idea of what needs to be paid off first, like the high interest debt, and how much in total you owe. Many times people are unaware of how in deep trouble they are simply because they don't have one 20,000 dollars credit line. Instead, they have multiple cards with 1000 dollars limits that together equal a large sum of money but separately don't' seem so bad. When you realize the situation you will find it is a lot easier to start paying off.
Tip 2. Pay On Time
Paying your bills on proper date is incredibly important from a credit standpoint. Every time you make the payment late you get a ding in your credit. The more dings you get the lower your score goes. So, always make the payments of your bills on time.
The easiest way to do this is determine how much money you need each month to make payment and set aside an account specifically for bill money. Then, when the due date rolls around you can easily clear the dues because the money is right there.
Once you start paying your bills properly your score will turn around and start inching up. In time, enough on time payments can bring a big difference in your score. Cleaning up your dues won't be done soon this way but you'll get a better score, and it will work. Simply pay your bills on the date given, don't spend, and watch your score rise.
Tip 3. Leave The Cards At Home
The hardest thing for many people to do is stop spending. This is especially so when they have made significant progress and have a good limit left on their cards.
Then, they are out and about and they see something they really want. They instantly remember they have enough balance to buy it and then they begin to struggle with the right decision.
Many times the desire for a flat screen TV or for anything else can be so strong that it weighs out everything else even in the face of reason. So, you will need to simply leave your debt cards at home. That way, no matter if the object is cool or sweet you can't buy it because you have no money.
Both Stephanie Foster & Ajeet Khurana 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.
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