8/18/2011 5:33 PM ET|
15-minute fixes for credit scores
A better score should be every consumer's goal -- and boosting the number may be easier than you think. These strategies can help.
Improving your credit score can feel like a gargantuan task. But by spending just 15 minutes, you can give your credit score anywhere from a small bump to a major boost. Here are some tips from credit experts on quick -- and sometimes easy -- ways to raise your score.
1. Set up automatic bill payment or alerts. "The one thing you need to do is pay bills on time -- that has the biggest impact on your score," says Carrie Coghill, the director of consumer education for FreeScore.com.
One way to do that is to set up automatic bill payment through your bank or credit union, at least for the typical minimum amounts of your bills, says Lita Epstein, the author of "The Complete Idiot's Guide to Improving Your Credit Score." Or, if you're not comfortable with automatic bill payment, Coghill recommends setting up regular email or text message alerts to remind you of bill due dates.
On-time payments over a period of about six months can increase your score by as much as 50 points, says Epstein. "It shows you are getting responsible about your bills."
2. Pay down revolving debt. If your credit card debt is more than 35 percent of your credit limit, it's probably dragging your score down, but paying balances down can provide a quick boost. Experts recommend setting up regular automatic payments to make a dent in your debt or making one big extra payment if you can sell something on Craigslist or eBay or if you get a windfall.
"People sometimes get a sizable tax refund. I recommend using that to pay off debt," says Doug Borkowski, the director of the nonprofit Iowa State University Financial Counseling Clinic.
A good rule to follow is this: For every $1,000 of available credit, try to use less than $350, says Clifton O'Neal, a spokesman for TransUnion, the credit-reporting bureau. "Say you have three cards, each with a $1,000 limit," he says. "One has a $500 balance, one has a $350 balance, and one has a $250 balance. Pay on all of them, but pay more on the first one to bring it down under 35%."
(Use MSN Money's calculator to see how long it will take to pay off your credit cards.)
3. Pay your credit card bill early. If you use your card for everything from groceries to utilities to a pack of gum to get rewards -- but pay in full each month -- pay early. Because if you charge, say, $2,000 each month but pay your bill after you get your statement, it looks as though you're carrying a large balance when you're not, Epstein says.
"Check when the statement closing date is," Epstein says. "Making the payment before the statement closing date -- just five or six days early -- can make a big difference over time. It will be reported to the credit bureaus as a $0 balance and will look like you're holding less credit."
4. Ask your credit card company to raise your limit. If you carry a credit card balance but have been making payments on time and make enough money to support a higher credit limit, a quick phone call to your credit card company could raise your score. A higher credit limit will lower your credit utilization ratio (the amount of available credit you're using), experts say. However, experts also say it's important to be honest about whether that step would tempt you to rack up more debt.
"It's about knowing yourself, asking, 'Am I going to be responsible using that credit card?'" Borkowski says. "Because what if your limit is $4,000 and it gets raised to $8,000, and all you end up with is more credit card debt? But, for those who can handle it, yes, call and try to get your limit raised so you're at a one-third or less (credit utilization ratio)."
5. Go online to dispute an item on your credit report. Some experts advise consumers to dispute a possible credit report error by registered mail, and to include evidence. But, let's face it, many never get around to making copies, hunting down a stamp and heading to the post office. All three major credit bureaus offer the option of filing a dispute online -- and it can be faster and easier, experts say. (Do you know your credit rating? Get an estimate with MSN Money's calculator.)
"The first thing to do is pull a copy of your credit report from all three bureaus. You can do it free once a year at AnnualCreditReport.com," says O'Neal. "Look at each one and see if there's anything you don't recognize. If you have any questions about information on your reports, you can file a dispute online. You can track it online, too, so it's a lot quicker."
6. Just say no to too many inquiries. When you're buying those cool new sunglasses and the cashier asks if you'd like to get a 10% discount by signing up for a store credit card, just say no. "Whenever you take new credit, you get a ding on your credit score, so don't apply for new credit cards all the time," Epstein says. In fact, she recommends applying for new credit, at most, twice a year.
7. Get a late payment removed from your credit report. In the "it-can't-hurt-to-ask" category, it sometimes pays to call a creditor and ask to have a late payment removed from your credit report. "I always say, 'Just ask,'" says Borkowski, who recommends asking for the hardship department whenever you call a credit card company to make such a request.
"A lot of times, general customer service might say they can't help you, but the hardship department -- or its equivalent -- might," Borkowski says. "They make a lot of money from the person who misses a payment every now and then but carries a big balance. They like to keep those customers."
8. Play what-if with your credit score. Each consumer's credit history is different, so Epstein recommends spending a few minutes at the consumer website Credit Karma. The site offers a peek at your credit score -- though it's not the widely used FICO score -- and offers a simulator that allows you to see how different actions you could take would likely affect your score.
"I use it all the time. I see whether my score is going up or down," Epstein says. "You can also go in a week after you've done something you think might have impacted the score, and you can see the change."
It is often repeated that, when it comes to credit scores, there are no quick fixes. However, if you follow these tips, you could see a big improvement in your credit score -- with just a small investment of time.
This article was reported by Allie Johnson for CreditCards.com.
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I have also noticed, all three credit reporting agencies will give you three different scores and all three see the same thing on your debts, what's up with that? One can give you a 695 and the other one will give you a 575??? So what's the point.
I always paid my CC s on time, I always paid more than the minimum payments, and always always always used my credit responsible. Before 2008, I had over 250,000 worth of open credit. But one by one they started to reduce my lines of credit for absolutely NO FKIN reason,
They reduced it down to less than 40,000 in available credit. I run a business with 15 employees, I use my credit to buy inventory
I am a SMALL BUSINESS OWNER and they could give a rats **** how or if we pay our bills.
I will pay off these bastards and only pay cash for the rest of my life!
We take credit cards in our business, but these bastards pay us often slow and dont pay us interest even though it may be a day or two late I am sick of this horrendous situation our government put us in,!
The banks in this country are all crooked and they can all go to hell!
i hate these kind of articles. they imply that there is a way to "fix" your credit. "fixing" credit is a myth, plain and simple. you can do everything right and the "banks" do whatever they want - deny you or grant you the funds - depending on what they see as a good customer.
the credit reporting agencies (all 3) are paid by the banks, collection agencies, etc to post the items you see on your credit reports so its not likely that the credit reporting agencies are willing to do anything to hurt the companies that line their pockets.
if you have PROPERLY disputed inaccurate items and the credit reporting agencies either have failed to correct them or have refused to correct items that you know to be inaccurate then take them and the bank/collection agency to court. you can do this yourself, you do not need a lawyer. check with your state since most state laws are more strick than the federal laws. you could bring suit in a state court for relatively low cost and be prepared to show you have inaccurate damaging credit items on your reports (canceled checks, credit card statements, etc).
if you do have this information and take it to court most judges will find for you, the plaintiff and award you damages and court costs. then the item can be removed and you have been validated (and a little extra spending cash to boot).
Ok people here is the real story, i used to work customer service for a very large bank. If you ask for a credit line increase, the credit card company will run your credit report and that can lower and most likely will lower your credit score. Its best to use just 50% of the credit, but anyone needing to use a credit card can rarely do that. All most every cc company will remove at least one late fee every 6 months to 1yr, but they will never remove a late payment history off of your credit bureau they do not have that power. So no need to call and throw a fit about that. Late payments are only reported to the credit bur if they are over 30 days late, once you are 30 days late you are s.o.l. Stupid advice like this article is what makes customer service employees lives hell. Just remember to be very nice when you call cust service the person you are cussing has "all" your personal information, name, add, ss#, cr score, ph #, etc.
Credit scores are meaningless garbage to me. I've checked all three and I've got a wide score range. I pay my bills, so how can this be? I contacted these credit bureaus, the scoring they use is simply bull. How can one complicated scoring model fit all? Some of us use credit cards, some use installment loans, some use none, or no credit, and yet a another group will use combination of loans and credit. One size can not fit all you must look at the person and what they use for credit.....
This is bull that these three companies can hold someone hostage and cost them more. I think the credit bureaus need the fixing, not the people. I do know I will not play by their credit bureaus rules and if the companies I use for credit don't like that, well they can go to.....
I have been doing this for several years after being swindled of half my retirement and it works.
If you have one collection you are likely to have more. This first collection is sold to another who sells it to another. Now you have three collections for one debt. They say that this is not suppose to happen but it does all the time. So check you credit report for duplications and challenge them. Have the duplications removed and only the up-to-date collection on your record then find a way to pay it off. They will most likely deal with you on the pay off to get it down to something you can afford. Once it is paid off you are looking at about one year before your credit score improves. Do the same with all of them if you have more then one.
On credit cards if they are current take the smallest one and pay it off as soon as possible. Then take the amount you applied to that card and add it to the next lowest card you owe on. Continue the process until all your cards are up to date.
After I was robbed and did not have enough money to pay my bills my credit score dropped to a 514. Ouch! It is now higher then an 820. Yahoo! You get one free credit report each year from all three of the major credit reporting companies. Use them even if you don't think you need to. Challenge them all. Make them to their job. In one case the company accused me of using a credit repair company and threaten me with legal action. Come and get me! I have all the paper trail to show I did this on my own. So can you.
Yes, its free, careful what you ask for. If you really want to clean up your credit, then thats fine.
However, I wasn't quite ready for that, more curious than anything.
I was so excited to get my free credit report, until I started
getting phone calls and bills from everyone I had ever owed...damn they finally
found me! How could this have possibly happened......?
If you don't meet ALL of the above criteria, your loan will be downgraded from approve/eligible to manual underwrite.........this mean IF you can find a company that will do manual underwrite, good luck getting an approval.
I'm a little surprised this article wasn't written by Liz Pullman, she regularly writes articles with erroneous information, maybe it's just MSN writers in general that talk about things they really don't know about
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