Improving Your Credit Score - Part I

Step 1: Check Your Credit Report - Look for Wrong Information

The very first step to improving your credit score is to get a full credit report. That way, you know exactly where you stand. Your credit score is calculated based on information in your credit reports. Your reports are like little biographies of your financial past but here's the rub, sometimes they are wrong. Go to one of the free credit report sites and get copies of your credit reports from the big three: Equifax, Experian and TransUnion. Then look to see if there are any mistakes. If you find any, contact the creditors involved and ask them to correct the errors.

Step 2: Set Up Payment Reminders

One of the best ways to improve your score, is to consistently make your monthly payments on time. Just about all sources of debt - from credit cards to auto loans to mortgage - have online accounts. When you log into your account you should see a quick way to set up alerts that can be sent to your phone or email. If you feel comfortable with making your payments, enrolling in automatic payments is the best way to go. This way, you know every single month you will be on-time.

Step 3: Come Up With a Monthly Plan to Reduce Debt

When you have bad credit, it's likely you got in that position because you just could not afford to pay back your debt in a timely manner. Many things in life can cause people to be in this situation, and it is more common than you might think. But if you find yourself in a fairly stable phase of life, it's well worth it to set specific goals in working towards paying off your debt. If you are able to do this, even little by little, you will slowly see your credit score go up. Now, this is certainly easier said than done. But the first step toward reducing debt is to limit your use of credit cards. Only use them when it is absolutely necessary. Next, look at all the sources of debt you owe. Which one has the highest interest rate? Put your debt budget towards paying off that, along with maintaining minimum payments on your lower-interest debt sources.

Increasing Your Credit Score in 2020

While making your payments on time and lessening your debt is clearly the top ways to improve your credit score, there are a few other ways that might just help. For one, you could request a higher credit limit. This may seem counter-intuitive but if you get a higher credit limit from your lender, 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. So, how do you get a lower credit utilization ratio? The best way is to pay off debt! One last approach is to 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 stuff. 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 isn't a true reflection on you. If you're a longtime customer, remind the person how much the company should value your business and how many offers you get to go elsewhere.

And lastly, if you are truly in need of your next vehicle, and feel like you can handle a monthly payment, getting an auto loan, even if it's a bad credit loan, can aid in your credit score. That is, of course, if you make your payments on time. If this is your case, contact us here at Loan Approval Center. Our financial experts can walk you through the process, step by step, in getting a vehicle that can serve your specific needs. Give us a call at (480) 813-5555 today! We look forward to helping you.