Credit Score Improvement 101: Tips For Consumers

Your credit score affects more aspects of your life than just your ability to get a mortgage or buy a car. In fact, many consumers find themselves surprised to hear that their credit score also affects their insurance rates, rental approval chances, and more. If you are facing a low credit score and bad credit, you may be wondering about how to fix it. Destroying your credit happens quickly and more easily than you might think, but repairing it is a process that takes time. Here's a look at some credit repair tips that you should know to help you get started.

Ensure Accuracy

The first step toward repairing your credit is to ensure that your credit reports are actually accurate. Mistakes happen, and accounts can be reported incorrectly, left on your credit for longer than they should be, and more. Take time to review each account on your credit report for accuracy, and dispute anything that is incorrect or should be removed. Sometimes, you can gain a few more points just by correcting inaccuracies.

Negotiate Collections Removal

Collections accounts can happen to even the most responsible consumers sometimes. If you've had accounts appear on your credit report in collections, you can often improve your credit by paying those collections accounts off. 

Reach out to each of the collections companies that are reporting accounts on your credit. Negotiate for them to remove the negative account from your credit report in exchange for paying the balance in full. Some collections companies won't be amenable to this, but many will agree to the removal. Get everything in writing so that you have documentation, then make the payment to clear up the account. 

Even if the collections company won't remove the account, paying the balance in full can often help your credit. Working with a credit repair specialist might help with this as well because they often have other tools at their disposal to help ensure the account's removal.

Make Positive Contributions

While addressing inaccuracies and negative accounts can have some effect on your credit, true credit repair also requires positive contributions. That means opening up some credit lines and showing responsible payment activities. 

You may have to start with a secured credit card. Only use that card for a few small purchases each month and make your payments on time every month. Each month of positive payment history will help to improve your score.

Understand Your Score Composition

Another key factor in repairing your credit is understanding the composition of that score. Each credit bureau will have its own score, and those scores are calculated based on a variety of factors. Your payment history, including on-time and late payments, is the single biggest factor. You'll also find that your mix of credit lines is a factor. Securing credit cards, a car loan, a mortgage, and other varieties of credit types will help to improve your credit. Credit bureaus do put weight on maintaining a mixture of credit lines. The age of your credit is important too. The longer you've had your credit accounts, the less risk you pose to lenders.

Work With A Credit Repair Company

Another thing that you can do is to work with a credit repair company. Your credit repair company will help you communicate with the credit bureaus and creditors. They often have training and expertise to get results that you might not be able to get. With the use of formal letters and other techniques, they may be able to help you improve your credit faster and more effectively than you could do on your own.

These are some of the most important things that you should understand when it comes to repairing your credit. The more proactive and patient you are, the more likely you'll be to see those score improvements when you need them. Contact a credit repair service, such as Credit Scoring Advisor, near you to learn more.