Know The Score
Personal credit scores affect many aspects of your life — more than you may think. It’s important to keep your score as high as possible, and most consumers know that paying bills on time and staying well below your credit limits are sure-fire ways to build and maintain good credit. But here are some lesser-known strategies to boost your credit score.
Fix clerical errors: Not only does this apply to your personal data, but also to errors to your financial data. For example, it can make a big difference to your score if your limit on a credit card is understated. For example, assume you owe $5,000 and your credit limit is $15,000; that means you owe 33% of your limit. However, if your credit limit is incorrectly listed as $8,000, it will look like you’ve borrowed 63% of your limit..a significant difference. Check your credit reports and correct errors.
Get credit where it’s due: If/When you fix errors or take actions that should boost your score, make sure all three main credit-reporting agencies (Experian, Equifax, and TransUnion) know about it. Be proactive about contacting them and making them aware of what you did to repair your credit. By law, you can get a free copy of your credit report from each agency once a year — do so, in order to spot errors and find other score-boosting opportunities.
Think before you act: If you’re planning on closing an account, think twice. It’s often a sensible thing to do — to simplify your financial life — but in some cases closing an account can actually ding your credit score. Oddly enough, a host of seemingly other sensible moves can hurt your credit score as well — such as using just one credit card for most of your charges.
Preventative measures: Here’s a tip for anyone selling a home for less than they owe on it: What you’re looking at is called a “short sale,” and there is the potential that you could end up owing thousands of dollars to your mortgage lender. Before the sale closes, ask the lender to keep the debt off your record (and get their response in writing). Ending up with a big balance owed can be a black mark on your credit report.
Just Ask: One gambit few people think of is simply asking for what you want. In order to help you pay down your debt more quickly, ask your credit card provider to lower your interest rate. If the lender refuses, see if you can transfer that debt to a card with a lower rate. If you have one or two late payments on your credit record, ask your lender if they can be erased as a “goodwill deletion.” Lenders are likely to be especially responsive to their best customers. And if you’re dealing with a collection agency over debt, ask if they will delete it from your record if you pay it off. Not all requests will be honored, but it certainly doesn’t hurt to ask.
If a high credit score is important to you — and for most of us it should be — these less-thought-of ideas may offer opportunities to help you bump up your score and maintain solid credit history.
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