There are ways you can increase your credit score and credit rating, from removing negative history from your credit report to making repair efforts. Most of these actions are easy enough to complete, but it will take time and a little persistence in order to get the credit score that you are looking for.
Obtain a Copy of Your Credit Report
The first step that you need to take to increase your consumer rating is to obtain a copy of your credit report and your credit score. You will want to acquire your credit reports from all three of the major credit reporting bureaus including Experian, Equifax and Transunion. Be sure to check over your credit history thoroughly and make a note of questionable debts and those that have passed the statute of limitations before you beginning the credit repair process.
Unverifiable Debts
The Credit Reporting Agencies Act provides that a debt is only valid if it meets certain requirements, such as it is accurate, complete, and able to be verified. You can send a debt verification letter to the collections agency holding the debt. They must provide you with legitimate verification in order for the debt to meet the verifiable conditions to remain a part of your credit history. Typically, the only way for the collections agency to validate the debt is by obtaining a copy of the actual signed agreement that you made with the original creditor. If this information cannot be provided to you, there are steps that you can take in the credit repair process to have this debt removed from record to keep from affecting your credit score and to increase your overall consumer rating. Learn more about the debt verification process with our FREE Credit Repair Kit.
Statute of Limitations
The next step you can take to help repair your credit score is to have all debts removed from your credit history that have passed the statute of limitations. Debts and collections can remain a part of your credit record for seven years, which begins six months after you make you last payment. Bankruptcy can stick around for ten years. Removing these past debts from your record can help to increase your rating. Learn more about the Statute of Limitations for Collections, Debts and Bankruptcy.
Pay Down Debt
The next step you will want to take to increase your credit score will be to begin paying down some of your debt. When you make regular payments over a period of time, this becomes a part of your credit history as a positive reflection on your credit report. You want to aim to pay down enough on your debts so that you owe less than 50% of the total available balance on all of your accounts. The credit reporting agencies consider it negative to remain “maxed out” on your available credit limits. If you have little to no available credit left this will negatively effect your credit score and rating. Paying down the debts on all of your credit cards to below 50% of your available credit limit on each one will help increase your credit rating. Paying them down even further will help give your credit score even more of a boost.
Paying off Credit Cards
If you happen to start paying the credit cards off, you should always keep the line of credit open, since it will reflect as available unused credit on your credit report. If you pay one credit card off and then close the account while having other credit cards open with high balances, it appears to the credit reporting bureaus that you are maxed out again.
Example: Let’s say you have two credit cards one with a limit of $10,000 and a second credit card with a limit of $2,000 with a $2,000 balance. You go and pay off the $10,000 credit card and close the account. You now only have one credit card with a $2,000 balance and are using 100% of your credit again ($2,000 / $2,000 = 100%).
If you would have kept the $10,000 limit credit card open you would have two open lines of credit in good standing and would only be using 16.7% of your available credit ($2,000 / $12,000 = 16.7%).
The credit reporting bureaus give a higher score to people who use a smaller amount of their available credit so pay the credit cards down, pay them off but keep them open. If you are worried about charging them up again, just take he credit cards out of your wallet or purse and put them in a safe place at home.
Consolidate Your Debt
If you have the option, you can try to pay off one or more debts by combining them into one. This may help make the payments more manageable, especially if you can put your debts into a consolidated account that charges no interest for a period of time. This will further help you to be able to pay down your debt quicker when you do not have to worry about interest being added every month. Look into 0% credit card balance transfer options as they will help you pay off the credit cards the fastest.
Open New Credit
One way to try to increase your consumer credit rating is to open a new account. If you have little or no credit your credit rating will not be very high since you have not had enough history with borrowing to reflect a strong credit worthiness. When you have had the account open for more than a year, you should be able to see an improvement in your credit score as long as you make your monthly payments on time and keep your balance below 50 percent of the total credit limit amount.
The most recent history on your credit report is a better reflection of your current financial stability and can increase your consumer credit score. If you are having a hard time obtaining an account with a new creditor, try starting with a secured credit card. Those without much of a history in borrowing and repayment could benefit from obtaining a new line of credit.
Get a Co-Signor
Another way to improve your credit report’s score is to try to be added to a friend or family member’s account or open up a new joint line of credit if you cannot get a new account on your own. Be sure that when you are added, it is not just as an authorized user, but as someone who has responsibility in helping to repay that debt. Consistent payments and keeping the debt down will help increase your credit rating.