Credit scores are seemingly only relevant when you need to apply for a new loan or credit card. It is true that your credit rating can impact your interest rates, loan amount or credit limit and your ability to get approved for the financing you seek. However, credit scores are also reviewed when you apply for new insurance, apply for a new job and in other important scenarios that impact your financial well-being. Many people are alerted that they have bad credit scores when they apply for financing, but others simply believe that they have a lower credit rating. Because of how important your scores are to various aspects of your life, it may be time to work on improving your scores by following a few easy steps.
Review your Free Credit Report
The first step in the process is to obtain a free copy of your credit report. You are entitled to one free copy of your report from each of the three primary credit bureaus every 12 months. You may need to contact each of these three bureaus directly to obtain your free copies rather than to rely on a third party service provider. Keep in mind that each bureau may be reporting different things about your financial profile and credit history, so it is important to review each report rather than to assume that they are all reporting the same information.
Correct False Information
Some people are dismayed to learn that the information showing on their credit reports is incorrect. False information often works against your credit rating, so you understandably want to correct false information. To correct false information, gather together supporting documentation showing that the information is false, if possible. For example, if the credit report shows that you made a late payment on April 2015, use bank statements to verify that the payments for March, April and May 2015 were made on time. You should send this information to the lender or credit as well as to the reporting credit bureau in writing along with a letter of explanation. It may take several weeks to complete this process, but you may notice an immediate increase in your rating after negative information has been corrected.
Improve Your Rating Over Time With Smart Debt Management
Some people find that their credit rating is lower because of their own mismanagement of debt. You may have late payments, collections accounts and more on your credit report. First, bring all outstanding debts current, such as by paying late balances or by paying off collection accounts. Then, make an effort to pay all future payments on time. If necessary, set up automated payments to ensure that the payments are made in a timely manner. Over time, you will see your scores increase.
Your credit rating is a critical aspect in various areas of your life, so you should always be aware of what your rating is by reviewing it annually. If you are aware that your scores are lower, take necessary steps to improve the situation. You may even have to do a search for the best credit repair companies to get professional help. By doing so, you can enjoy tremendous financial benefit in the years to come.