Simple Tricks To Rebuild Your Credit Score

Written by on July 3, 2012 in Money - No comments | Print this page

Paying off debt can be difficult

Like magic, good credit makes many every day tasks much easier.

With the recent economic turmoil that is occurring through out the world many peoples lives have been turned upside down. They have lost jobs, they have had their hours cut, they have take less pay, they have had to move, their underwater on their homes, etc. The result of all of this hardship is that many people have had a dramatic drop in there credit score. If you are in that boat with them you should be asking yourself “What can I do to improve my credit score?”

  • If you have any type of credit account, such as a credit card, you already have a credit file. The first thing you need to do is get a copy of that file by getting a free credit report from one of the agencies.
  • Spread out your debt. From the standpoint of completely eliminating debt this is a bad idea, but if the goal is to raise your credit score quickly then it is a must. Credit agencies prefer you to have many small debts over one large debt.
  • Be very leery of closing accounts, and absolutely do not let a creditor close an account due to lack of activity. If a credit bureau sees a “closed by grantor” on your file they will lower your score. Having a high credit to debt ratio is good for your score.
  • Have a mixed bag of credit. Again the goal of this article is to improve your credit rating. A mixture of one or two installment loans with a few revolving accounts (credit cards) is the quickest way to raise you credit score. Be careful when applying for credit though, too many hard credit inquiries that occur when applying for credit will have a negative impact on your score.
  • Always pay attention to your credit report. There are three main credit bureaus each one is required by law to provide a free credit report once a year. Get those reports. False or outdated information gets recorded on them all the time. Make sure yours is accurate. If there is anything in them that is wrong contact the agencies right away to get them fixed.
  • Do not be afraid of credit. Using credit cards properly improves your credit score. Just never fall behind on payments. When purchasing with a credit card always have the money that is needed to pay it off on hand. Don’t plan on having the money at the end of the month, have the money. It is easy to spend more than you think you will have. It is hard to spend more than you do have.
  • When making payments always pay off MOST of your bill. Not all of it. Just most. You want to keep a balance of $5.00 – $10.00 on your account. Many financial gurus would say that is a bad idea because you are paying interest on it, but the goal right now is to improve your credit score. The credit bureaus love when there is prove that you are actively using your cards.

Much of the advice above is very dangerous for people that have problems with finance. Instead they should probably use a strategy that involves getting out of debt and then avoiding it entirely. But for those that for whatever reason need to raise their credit score quickly the above methods should work.



About the Author

Matt Brand

Matt Brand is QLR's money saving expert. His experience with credit cards and student loans have made him take a strong interest in personal finance, saving money and sharing his knowledge. He is passionate about teaching others how to avoid the trap and make smart financial decisions. View all posts by Matt Brand.