April 05, 2006

Tips to better your credit score

A big debt, a bad credit score, innumerable loan repayments and a few financial mistakes – that’s all it takes for your finances to get to the point of no return. If you’ve realized that you need to do something about the situation before it devours you, then here are a few steps that will help you improve your credit score. Remember, these are not ‘get results quickly’ methods. Almost all these steps will take time and repairing a bad credit score will take a considerable amount of time and patience. So, banish all the delusions in your head and check out these simple steps.

One of the first things you need to do is obtain free copies of your credit reports. Ensure that they are accurate. In case there are any incorrect items, you can dispute them with the bureau that reported them. You should also get your credit score while you're at it.

Once you have an idea of how deep in debt you are, you can begin creating a plan to pay off outstanding balances like student loans and credit card debts. Most creditors live by the dictum ‘Better late than never’. They understand that you may have had your reasons for falling behind on your obligation. All that matters to them is the fact that you paid what you owed them.

Next in line are your current credit obligations. Don’t try to delay making payments on them – nearly 35 percent of your credit score is calculated based on whether you pay on time. So, if you pay on time, you are sending a message across to potential creditors that you can be responsible with credit.

Lastly, the most important thing is to have a lot of patience. Your credit score is not going to improve overnight. You will be required to make sacrifices and scrimp and save on money to make your payments. While you are repaying your debt, try to create a plan that will help you stay out of debt in future. This will ensure that your credit score remains good and that you never fall into such a trap again.

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