Analyze Your Credit Report for Better Credit
Your credit report is a snapshot of your financial history that includes details about your credit cards, loans, and other financial interests.
The information in your credit report is used to determine your credit score.
Experian, Equifax, and Trans Union are the three main entities that assign a credit score that ranges from 350 to 850. Together, these values determine your overall FICO credit score.
What Do These Numbers Mean?
Your credit score comes into sharp focus when buying a car or a home, applying for a credit card or a loan, or even applying for certain jobs. Credit scores also play a role in determining your eligibility to rent a place to live.
In other words, your credit score must be “up to par” in order for you to get the things you want in life.
Having a low credit score means missing out on important opportunities with lenders, employers, banks, and other financial decision makers. Fortunately, following some simple steps can help repair bad credit in big ways.
Here are seven ways to improve your credit score:
1. Request copies of your credit reports
Every person is entitled to one free copy of each credit report per year. You can either arrange to receive these through each of the individual credit bureaus or through an official website like AnnualCreditReport.com.
Credit reports offer detailed explanations of what impacts your credit score so that you can research errors, correct them, and make changes to improve your credit.
- A credit report lists information on each account with a credit balance, including how much you owe, who you owe the money to, and a record of your payment history. Past credit accounts that have been resolved may also be included.
2. Obtain your credit scores
It is best to request a copy of your credit scores every six months to track changes in your credit over time. Each credit bureau assigns a separate score, which is then combined to create an overall FICO credit score.
3. Create an improvement plan
Once you’ve received the right information, you can create a plan to solve credit problems individually for each record on your report. Address these records individually and design a plan to dispute or repay the debt to improve your credit.
4. Dispute incorrect information
Contact each creditor individually for more information on any debts you have questions on.
A credit report can list outdated or incorrect information that negatively impacts your credit, so be sure to dispute any false claims as soon as possible.
5. Pay down your debts
Pay your personal debts off as soon as you can to improve your credit rating.
Start with your smallest debts first, then focus on larger ones. Contact each creditor personally to establish a repayment plan.
6. Follow up
Don’t assume your claims for correcting errors and paying off debt is being handled properly. Continue to check credit reports to verify what you expect to be true, and follow up with creditors if necessary to ensure your accounts are correct.
7. Pay bills on time
One of the most significant ways you can improve your credit is to pay bills on time. Design a personal budget to ensure you have the proper funds to pay bills before the due date.
These small steps can have a big impact on improving your credit rating.
Your credit score will continue to rise the longer you maintain a positive credit experience with your creditors. Keeping your credit balances low and repaying debts on time is the surest way to increase your credit score and rating, which can also improve your quality of life.