April 25 2016
Today if you want to get just about anything you need to have good credit. If you want a car or a new home or even some insurance companies do a credit check before offering you a rate. Electric companies will check your credit and if you have bad credit they will charge you a deposit fee just to turn on your power. So it is very important to have a good credit score these days.
There are several things you can do to improve your credit score. The first thing you should do is get a copy of your credit report. You can get a copy of your credit report for free a many different websites. Some of them do charge but, most will at least give you a trial membership. If you don't want to do that then you can ask whoever ran your credit report last to give you a copy. If a place has recently run your credit then you can request a copy and they are not supposed to charge you for it. Once you have your credit report you can start reviewing anything that might affect your credit score negatively.
Sometimes the person that ran your credit will even go over it for you. If you have a hard time understanding the report it never hurts to ask them. The first thing you want to look for is any debts that may be delinquent. If you do have things that are not paid up to date then that is the first thing you want to do. Even if you pay them a little at a time it can help improve your credit score. The important thing is that you contact the company immediately and set up some kind of payment arrangement. Most of these companies will help you out since they want their money. Some companies might even settle for less than what you owe them.
Once you start paying off those companies your credit score will start to go back up. Keep in mind that sometimes it takes a while for it to take effect. If you pay off a company today then your score will not go back up tomorrow. It is important to understand that increase your credit score does not happen overnight. If you don't owe people money then the problem might be that you just have no credit. When you have never taken out a loan on anything your credit report reflects poorly. The only thing to do about that is start getting things on credit a little at a time.
It is important not to have too much on credit because that can drop your credit score also. If you already have $20,000 on that you owe someone then another company is going to be less likely to loan you another $20,000. To start building credit it is good to get a credit card with a low balance through your bank. If you do not have a bank account then you need to open one immediately. Start off with just a $200 to $300 limit if possible. Then what you want to do is use it for everything that you would normally pay cash for. If you do groceries every week then use the card for that. Then make sure you pay the card off monthly.
If you just pay the entire card off before the end of the billing cycle then you are not going to increase your credit score by much. It is best to pay it off over a period of time. For example; if you owe $200 on the credit card pay $50 per month until it is paid off. Once it is paid off you start the cycle all over again. Keeping bills paid on time is the best way to build credit. Building credit is all about building a report with the credit bureau.