Improving Your Credit Score

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You probably know that people with good credit scores get loans easier and at lower interest rates than those with low scores. Good credit is a nice thing to have. If you are considering a car purchase soon, it might be a good idea to check your credit score so you aren’t surprised. But, how do you find out what your credit score is?

It’s not like the old days. Not long ago, you had to pay money to access your credit score. There were many institutions that would do it for you -like banks and credit unions. Today, it’s different. You can get your credit score for free from a number of websites. A very popular one is www.CreditKarma.com. Credit Karma not only gives you your credit scores from both Transunion and Equifax, it will give you tables of payments from your creditors so you can see your payment history. Another popular free site is www.annualcreditreport.com.

Credit scores generally range from 300 to 850. If you find that your credit score is lower than 700, it’s a good idea to see if you can build it up a little. There are several things that you can do. The finance guys at Kindle Autoplaza in Cape May Court House, NJ, a Ford and Mopar dealer, suggested the following.

Request a higher credit limit

This may seem counter intuitive but if you have a high credit limit, your credit score may go up. This is because of a factor called “credit utilization ratio.” This factor is the ratio of how much credit you use compared with how much you have available to you. Here’s an example: If you have a credit card with a $10,000 limit and $1,000 of debt on that card, your credit utilization ratio is 10 percent. You want that number to be as low as possible.

So, how do you get a lower credit utilization ratio? The best way is to pay off debt, if you can. The other thing you can do, believe it or not, is ask for a higher credit limit. Why not give it a try? One caveat though: once you have this additional credit, do not use it!

Look for missing information

Your credit score is calculated based on information in your credit reports. Your reports are like mini- biographies of your financial past. Here’s what you should know: sometimes they are wrong. Definitely look over the financial history the credit report has. Go to one of the free credit report sites and get copies of your credit reports from the big three reporting agencies: Equifax, Experian and TransUnion. Then carefully review the reports and see if there are any mistakes. If you find any, contact the creditors involved and politely ask them to change the data.

Request deletion of negatives

Just as creditors have the power to add positive data to your credit report, they also have the ability to delete negative data. They are generally reluctant to do this but, if you are a good customer and have a good argument why the negative information should be removed, they might do it. Here’s a good example: If you missed a payment because of medical reasons, mention that. The key here is to be able to show that the negative data point isn’t representative of the quality of customer you are. If you’re a significant and longtime customer, remind the person how much the company should value your business and how many offers you get to go elsewhere.

  

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