[O]ne’s credit score is vitally important to many of the things that we, as adults, strive for. Having a bad credit score can make it difficult, if not impossible to obtain certain types of credit, such as a home or car loan. If one with bad credit can get a loan, it is often at prohibitively high interest rates and unfavorable terms to the person borrowing the money. A low credit score can be a big barrier in life, but there are many ways that one can work to improve their credit score over time. It is important to not the need to have patience, you didn’t get into a financial jam overnight, and you won’t get out of it overnight either.
The first thing you need to do is to evaluate your debt. Get a copy of your credit report and examine it with a fine-tooth comb. You need to ensure that all the debts on your credit report are actually yours, as mistakes do happen. If there are any debts on your credit report that do not belong to you, be sure to formally dispute them with the crediting-granting company. It might seem silly, but it is very helpful to make a list of all your debts, then order them by interest rate. This is how you can effectively prioritize how you will pay off your debts and improve your credit score.
It is also important, when trying to up your credit score, to not add to the debt you already have. Do not use any credit cards, department store cards or other lines of credit until you have your debt under control. You will never get out of debt if you are constantly adding to the proverbial pile. You want to focus on reducing your debt, starting with the debt that bears the highest interest rates – you end up paying a lot more for these in the end, so there is no sense letting these debts get racked up with excessive interest rates.
Do not be late when paying your bills, call and make arrangements if you cannot make your payments on time. Late payments or delinquencies look especially bad on your credit report and will not help you get your credit score up at all.
It is also advised to avoid keeping large balances on your credit cards, as this will work against you with your credit score. It is also not advised to just close out your credit cards either, as this can reduce your score. Once you have your debts paid down, keep small, regular balances on your card that you can easily repay.
Remember that improving your credit score is not an overnight fix. Many of the things reported on your credit report, that affect your credit score, actually stay on the report for a long time. Bankruptcy stays on one’s credit report for ten years, and any judgments or delinquencies will stay on the credit report for seven years. But by whittling your debts down and learning better financial management strategies, you can work to improve your credit and you will see results.