Last week, we covered some basic strategies to improve your credit rating fast: Piggybacking, disputing items on your credit report, and rapid rescoring. Let’s kick off the holiday season with four more ways to get your credit standing in tip-top shape, and keep it there.
Use Automated Payments
Everyone forgets a owed amount from time to time so don’t worry this is a common occurrence and there are ways around it. Unfortunately, skipping payments and missing payment deadlines can really whittle away your good credit standing turning it eventually to bad credit. To avoid misplacing your bills, use electronic billing whenever possible. This is a program that will automatically make the payments for you so you don’t have to worry about missing them. To make the most of this service, set up automated bill payments so that you never have to worry about late payments again.
Summarize Your Extenuating Circumstances
If you’ve got negative items on your credit report that resulted from an illness, job loss, or other hardship, you can attach a note (100 words or less) that tells banks why you didn’t make your payments. This note can mean the difference between acceptance and rejection, especially if your credit history shows that you started paying again when your circumstances improved.
Pay Down Your Debt
If your available credit is nearly maxed out, you need to work fast to reduce your debt. banks want to see that you can maintain a healthy debt-to-credit ratio. If you continue to make charges on credit card accounts that are near their limit, you will only hurt your chances of getting a loan. Instead, make monthly or twice-monthly payments until your debt is reduced. Experts recommend starting with the card that’s closest to being maxed out. Your credit standing depends on the ratio of each individual credit card account, not all of your cards as a whole, so having even one card close to its limit can significantly lower your score.
Open Different Types of Accounts
There are two basic types of credit: revolving credit, such as credit card accounts; and installment credit, such as mortgages and car loans. You will help your credit worthiness by having a blend of each on your credit report. If you’ve never had installment credit before, it could be worth your while to take out a small personal loan and repay it in monthly increments. Just be mindful of your credit before you proceed. If you have a heavy debt load, opening new accounts can actually harm your score. But if you need the diversity, the benefit you gain from having a mix of credit types will probably outweigh the bruise that comes with opening a new account.
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