Your credit score can have a huge impact on your life, affecting your ability to purchase a home or a car. Your credit score can even influence an employer’s decision to hire you. So, obviously, you want your score to be as high as possible, and you want to ascertain that the information in your credit report is correct.
Your credit score is a record of your credit payments over time. Generally, the more recent the information in a credit report, the more emphasis lenders place on it. Improving your credit score can be a long process, but it’s doable if you pay your bills on time and keep a close eye on the information in your credit report.
Simple Steps, Big Impact
Improving your credit score involves many steps. Fortunately, those steps are all relatively small and easy to accomplish. Arguably the most important step in building good credit is to pay your bills on time. Missed payments and bills that have gone into collection have a huge negative impact on your credit score.
It’s also important to minimize outstanding debt as much as possible. And don’t apply for any new credit accounts. People sometimes think that having a good credit mix will improve their credit scores, but in reality, new lines of credit can look like new lines of debt on credit reports.
Improving Credit Takes Time
There is no quick fix for bad credit. If your credit score isn’t what you’d like it to be, your best bet is to pay your bills on time and wait. Remember, the most recent information on your report is emphasized more than older information. Even if you have late payments, multiple inquiries or bankruptcy on your report, you can still demonstrate financial responsibility by taking charge of your recent financial history.
Changing Your Credit Score
Your credit score is based solely on the information found in your credit report. Any change to your report can result in a change to your overall score. But it can be difficult to tell exactly what will change your score and by how much. The best way to determine how specific actions will affect your score is to obtain a copy of your credit report and identify your credit risk factors. These elements have the greatest influence on your credit score. They’re unique to each individual.
Rebuilding Your Credit
Your credit score is simply a number based on your credit history. How long it will take to rebuild your credit history depends on its current state. Delinquencies and most public record items remain a part of your credit report for seven years. The main exception to this rule is bankruptcies, which can stay on your report for 10 years. Inquiries remain for two years.
When it comes to improving your credit score, time and knowledge are your two greatest assets. Once you know what negative items are influencing your credit, you can take steps to avoid repeating or compounding those mistakes. Additionally, any small, regular steps you can take to improve your financial health can greatly improve your credit score over time. So having a bad score isn’t a hopeless situation. With some knowledge and discipline, you can turn it around sooner than you think.