Your credit score means everything in life. It dictates your ability to purchase a car, home, or to have the things you need. FICO scores range between 300-850 and are dependent upon your payment history and the types of credit you have. Trying to get a job or car insurance with poor credit can be tricky. If your credit score is below 650, then you need to take some drastic measures to increase it. Here are five things you can do to boost your score.
1. Check Your Payment History
Did you know that your payment history makes up 35 percent of your credit rating? Make sure that your creditors are reporting accurate payments. All it takes is just 12 months of a clean payment history to improve your FICO dramatically. Keep your payment history good for 24 months, and your score will make an even more significant hike. Your number of accounts, as well as the ones that are paid as agreed, will help to give you a great score. Anything that falls into the 60 to the 90-day late category will negatively impact your score big time.
2. Dispute Any Inaccurate Reporting On Your Credit Report
Many people don’t know that they can dispute any inaccurate items on their credit report. It’s as easy as filling out a dispute form. All you need to do is contact the credit bureau and tell them what data is incorrect. They will contact the company that is posting the incorrect item. The company must either send back proof of the debt or ask for a revision. If the company doesn’t respond to the credit bureau’s request, then the damaging error will be removed. Cleaning up your credit report is a great way to boost your score quickly.
3. Settle Old Debts
One of the biggest detriments to a credit score is collection accounts, charge-offs, and judgments and liens. If you need to buy a home or car, you may want to do some cleaning months in advance. For instance, if you have an old collection agency debt that is years old, they will almost always settle for less. Once they mark that item “paid-in-full,” the FICO score won’t be negatively impacted as much.
4. Ask For Grace From Your Creditors
Everyone falls on hard times once in a while. It’s okay to ask your creditors to help you out. Even if you have a small slip-up, it doesn’t mean you deserve those negative marks. Creditors can wave the late payment mark or wave late fees to good customers. Just make a simple phone call and ask for grace.
5. Correct Your Debt-To-Ratio Issues
Your total debt utilization needs to be about 30 percent of your FICO score. To figure your ratio, the FICO agency takes the amount of money that you owe to creditors and compares it to how much available credit you have. For instance, if you have credit cards with a possibility of $10,000 in total debt, then you need to keep the amount charged under $3,000. Any more than this will make your debt-to-ratio out of whack. Pay off debts to make your ratio fall within the proper parameters.
The goal is to have your score as high as possible. When your score gets above a 700, you have a better chance of getting approved for a loan with a great interest rate.