Credit is one of the most important things to keep good. Without credit, you can’t purchase vehicles, homes, or even credit cards or cell phones. Some utility companies won’t even look at you unless you have good credit. Many companies looking to hire new employees are now checking credit reports. Here are some tips for enhancing your credit score and fixing credit mistakes made in the past.
Request a copy of your credit report from the 3 major credit reporting companies (Transunion, Experian, and Equifax) online. Each credit reporting company has different information on your credit report, so be sure to request one from all three. If you’ve recently been turned down for credit, you can get a copy of your credit report from all three companies for free. Otherwise, you’ll pay about $9.95 for each report. See resource list below for links to the credit reporting agencies.
Look over each credit report to validate the information. Be sure to check that your social security number, names (including any maiden name or married names), addresses (current and prior), and telephone numbers (current and prior) are correctly written. If there are mistakes in your personal information, this can cause you to be turned down for credit. All of your information from the first time you requested credit when you were younger until now will be on there. Make sure there are no other names on your credit report except those you have used yourself. Any spouses you had or have will be listed as well. This is okay.
Verify that each company listed on your credit report is correct. All three credit reports will show any company you had a credit card, student loan, revolving line of credit, or bank loan through. Be sure that all these company names and amounts are correct. Check any companies you may still owe money too and highlight them or mark them with a pen for future reference. If all these amounts are correct, proceed to the next step. If not, make a list of the credit companies that still have balances showing and contact all of them to dispute amounts. Try to come up with receipts of payoff if possible. If not, find check stubs or anything that will prove you paid this account. Most companies will find the mistake themselves and work with you if you’re insistent.
Come up with a plan to pay off any balances you owe to past credit companies. Decide how much you can pay each a month until they’re paid off. Take even one or two at a time to pay them off slowly. Contact each company and tell them your ready to settle up with them. Tell them how much you can pay and how often. Most credit companies you owe money to will settle for a lesser amount than what you originally owe. Talk to them about a settlement and see what you can come up with. Settling an account will look much better on a credit report than a balance and more companies will be willing to lend you credit.
Dispute any personal information or balances that are not correct on your credit report. Each of the three credit reporting agencies has a link to dispute any inaccurate information on your credit report. It takes a few weeks to go through, but it completely worth the time since, if you are correct, the information will be taken off your credit report without a hassle. If it’s balances on accounts or company information that you are disputing, you may need to provide receipts, addresses, or check stubs to the credit reporting agencies. But usually, if you have the contact information of the company who made the mistake, the credit reporting agencies will look into it on their own and get back to you with a result.
High student loan balances can also harm credit and need to be dealt with as best you can. Most of us do not have the ability to pay off these high balances so they stay on our credit reports while we pay a monthly amount on them. Get rid of multiple student loan balances by consolidating the loans. Consolidation will take all those student loans and wrap them into one loan making your credit report look cleaner and offering you a lower monthly payment. Ask your loan provider for assistance or check online for a student loan consolidation company. See the resource list below for some links to student loan consolidation.
Do not apply for any more credit than what you need. Each time you apply for credit, it shows up on your credit report. Multiple tries at credit on your credit report will make companies leery of providing you with a line of credit. Also, don’t apply for credit if you know you won’t get it. This just adds more requests to your credit report and looks bad. The only time this is suggested is the one time you wish to receive a free credit report from all three agencies. In this case, apply for credit one time from a place you know you won’t get credit from. If you can show that you were turned down for credit once, all three agencies will give you a credit report for free. Again, do this only once to protect your credit rating.
Once you have taken a few months and cleaned up your credit report a little, gain some credit from a place you know you can get approved. Try getting one credit card or a small personal loan from your local bank. Keep this loan good and make monthly payments on time. Pay off the balance as soon as you can, but no sooner than 6 months. Having an open line of credit for 6 months or longer will provide you with good credit as this company will report each on time payment to all three credit reporting agencies. This is the best way to build credit again. If you pay off the balance of an account sooner than 6 months, it does not do much for your credit either way. That is why it’s best to keep the account open for at least 6 months for good credit reporting.