Ways To Improve Low Credit Scores
By Gustan Cho
Having low credit scores today is a major hurdle and those who have low credit scores are not alone. Million of Americans have low credit scores but the good news is that there are many ways to improve low credit scores. Having low credit scores is not a permanent problem and there are many quick fixes in improving and boosting credit scores. Consumers with low credit scores do not have to hire expensive credit repair consultants and whatever a credit repair professional can do, they can do it themselves. Credit repair consultants can most likely do it faster and may know the tricks of the trade but many of those who want to improve their credit scores may not need the help of a credit repair consultant. Improving your credit scores may just take just paying down your credit cards, or adding new credit. If you have no credit or limited credit, you may have to add more credit and that can be the quick fix for you in improving your credit scores. Or on other cases, the credit bureans may be reporting false information on your credit report and that may be the cause of your low credit scores. You might be a victim of identity theft and you might not realize that someone else is using your credit and personal information to open up new credit. Creditors may be reporting wrong information to the credit bureaus such as a late payment when you were never late. We will cover the various ways of improving your credit scores in the quickest amount of time.
Strategies In Improving Low Credit Scores
If you have no credit or had prior bad credit and decided not to get new credit and pay everything in cash, you will most likely have bad credit. Even if you had a great payment history in the past and went through a period of bad credit due to a job loss, bankruptcy, foreclosure, or medical issues and have not gotten new credit since your period of bad credit, then you can easily boost your credit scores by adding new credit.
How Can I Add New Credit If I Have Bad Credit And Low Credit?
Mortgage lending guidelines state that after a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, or periods of bad credit that the mortgage loan applicant need to have re-established credit and three to five established credit tradelines seasoned for at least 12 months. Common sense question is how can I get new credit in order to re-establish my credit when my credit scores are so low and I have no credit due to bankruptcy and/or foreclosure and recent collections. No unsecured credit provider will grant credit for a consumer who has just gone through a period of bad credit issues. The best way to add positive credit is through the use of secured credit cards. Secured credit cards is the fastest and easiest way of getting credit or re-establishing credit after a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, or periods of real bad credit. Each secured credit card, depending on the consumer, can boost a person’s credit score by at least 20 or more points initially and as the credit payment history ages, the person’s credit scores will keep on going up. It is recommended that the consumer gets at least 3 to 5 secured credit cards with at least a $500 credit limit.
Paying Down Your Credit Cards Will Boost Your Credit Scores
If your credit cards are maxed out, the chances are that your credit scores will be low. This is a temporary problem and your credit scores will go right back up once you have paid down your credit cards. Your credit utilitization ratio is how much of the available credit on your credit card is being use and it is 30% of your overall credit score. If your credit balance is close to your credit limit, your credit score will be low. The higher your available credit limit is, the higher your credit score. It is strongly recommended that you have no more than a maximum of 20% credit balance.
Recent Late Payments
One recent late payment on a credit card, installment loan, or any other credit payment can lower your credit scores by at least 50 or more points and will be reported on your credit report for seven years. If you have had a good long term relationship with a creditor and you just forgot to make a payment and that payment is reported 30 days or more late, contact your creditor and ask them if they can, as a one time courtesy, remove that late payment. If you never had a prior late payment with that particular creditor and this was a one time mishap, your creditor will most likely show goodwill and have that late payment removed. If the customer service representative refuses to do so, ask to speak to a supervisor.
Pay For Delete
If you are required to pay off an old collection account with a balance or get threatened by a collection agency that if you do not pay off the unpaid collection account they will pursue judgment actions, you can request that if you pay the delinquent amount that they remove the derogatory off your credit report. This action is known as pay for delete and is done all the time. A collection agency or creditor do not care about what is on your credit report as long as they get their money so this should be a quick fix. They are not going to volunteer that they will do a pay for delete so you need to demand it and use it as part of your negotiation.
Pay Your Bills On Time
You need to realize how important it is that you pay your minimum monthly payments on time. One late payment will not only devastate your credit scores, but when it comes to qualifying for a mortgage, it can set you back 12 months. Many mortgage lenders will not approve a mortgage loan to anyone who has not had at least a 12 month on time payment history. Some lenders will go as far as requiring a 24 month on time payment history.