A most Important Number It’s not your social security number, your phone number, or your birth date. While most of us don’t know this number, it is essentially dictates your finances. This number is your credit score..A credit score is a number that lenders use to help decide ‘if I give this person a loan or credit card, how likely it is that I’ll be paid back on time”?
Also called a risk score, this number is a statistical measure of the risk that you’ll be able to repay the debt as agreed.If you’re planning on making a major purchase, taking out a loan, or applying for a credit card, you’re going to need a good credit score.
If you’ve come to the realization that your rating isn’t as positive as you had hoped, it’s time to start improving it, and here’s your guide to getting started
Find out where you stand.
The first step towards developing a better credit score is to determine where it currently stands. Start by checking with the three major credit reporting agencies (CRAs) listed below. You’re entitled to one free report per agency, per year, and you have the right to dispute any mistakes, so request that each CRA send you a copy of your report.
Figure out the Facts.
Credit reports in hand, take a good hard look at the data in front of you. Credit reports are rarely as spotless as you think – that one late payment on your Visa can stay on your report for up to seven years (long after you’ve forgotten about it). In addition, in October 2004, CBS News reported that nearly 80% of credit reports contain at least one error, proving how vital it is to make sure that everything is accurate.
After identifying and discrepancies, you need to eliminate them. A dispute form usually is sent along with your credit report – or you can request one from the CRA’s website – so fill out the form and send it back to the CRA as registered mail. Make sure you document each step that you take in clearing up your report in case you need backup later on. Fortunately, the law is on your side, stating that any item that is not verified as accurate must be removed from your report.
Call in the clean-up crew..
You’ve cleared up any errors, but there are still a few legitimate dark spots on your report. What’s a person to do?
Identify any debts that are still pending, and set up a plan for eliminating them. Clearing up debt can take time, which makes it even more important to get started immediately. Remember that you have the right to add remarks to your report, such as highlighting a loan that you paid on schedule.
Fix, rinse and repeat.
Time is your best ally when it come to your credit report – consistent payment (no matter how small, so long as they meet the minimum) prove that you are responsible enough to repay loans as promised, over time they will outweigh the negative points on your credit report.