In the last decade, many financial institutions have changed their criteria for lending money. Banks are now willing to lend money to individuals with bad credit, but only if they can prove that they are making efforts to improve their credit.
The average score of Americans with a credit report is 698, according to VantageScore. However, many individuals have insufficient credit, accumulating in credit scores that are lower than this.
Some people with insufficient credit simply don’t have enough money in their savings account to pay for a car repair or a home improvement project.
They might not be able to pay for these things without borrowing from friends and family. In addition, some people don’t like asking for help from others because it makes them feel indebted to those who helped them out.
This is why they end up getting into credit card debt and paying more interest than they would if they had just put a little bit of extra effort on maintaining an excellent credit score.
For many people, it’s not much of a challenge to achieve a 600 point credit score, but moving beyond 700 can be quite difficult. If you’re currently trying to improve your
credit score, there are several steps you can take to surpass the 700 marks.
Send Goodwill Letters
The most important thing you can do to have a positive credit history is to send out a goodwill letter or a dispute letter to your credit card company. The letter will be filled with your relevant credit inquiries.
In this letter, you will explain to reconsider the negative remarks on your credit files. You can send this letter to your credit card issuers to plea for a credit check.
The goodwill letter should be clear and concise. Make sure that it is personalized to each of the banks and credit card companies that you are trying to get a loan from.
It’s also important that you make sure that all of the information in your letter is accurate. It’s best if your creditors know exactly what happened so they don’t get angry at you for not following through with their request for a good faith payment on a debt, for example.
Depending on the history listed in your credit report, you might also be able to make small changes with simple requests.
For example, if you notice any errors on your report, you can report them to these
three major credit bureaus: TransUnion, Equifax and Experian. The purpose of these letters is to ask for a copy of your credit report.
It’s important that you don’t just send a request for a copy of your report; instead, you should use the goodwill letter as an opportunity to express how much you appreciate the credit reporting agencies and their services.
Write a personal note on the back of the letter so that they know how important it is for them to provide you with this information. You might also include links or web addresses where they can find more information about your complaint or review process.
Include all relevant details such as dates, phone numbers and account numbers in your goodwill letter so that they have everything they need in order to help you resolve any problems with your credit report. After all, if there are any errors on your report, then it’s possible that you could end up paying for loans or credit cards that you never intended to take out in the first place.
Additionally, some creditors respond well to communication with their customers. If your credit report is generally quite clean, it might be worth sending goodwill letters to your creditors. A well-executed goodwill letter can let you determine whether there are additional steps you can take to relieve your financial burden.
Sending a concise letter that explains your situation, your plan for improvement, and polite requests can go a long way.
Even if creditors are unwilling to help, a well-written letter can’t hurt. With good luck and fortune, though, they may be able to give you some pointers on how to reach a positive credit history.
Take Advantage of Free Help
The most important step in bringing your credit score up is the actual work, developing a strategy and cleaning up your credit history. Fortunately, there are two free services that assist with each of these two steps.
Credit Sesame helps users determine how they should go about improving their credit.
Collection Shield 360 helps with the actual cleanup, including putting a stop to collections calls.
You should also consider taking advantage of free credit reports from major consumer credit bureaus. The reports that you can get for free will be less detailed than the ones that you can buy, but they’ll still give you a good idea of what is going on with your credit.
In addition, these reports are free and will not affect your credit score. As long as you don’t apply for any new loans or credit cards, then you won’t have to pay anything in order to receive this information.
The fact that these reports are free doesn’t mean that they aren’t important; after all, they provide an accurate overview of your financial history.
If there are any problems with your report, then it could be very beneficial for you to take advantage of this information before applying for loans or other forms of credit.
Consider Low-Interest Loans
When your debts include several high-interest accounts, it’s likely going to be very difficult to make progress in paying down the balance. Because of this, it might be a good idea to seek out low-interest loans. This way, you can use the loan to pay off the high-interest balance and start over by paying a bill with a much lower interest rate.
A loan lender doesn’t generally like to lend money to people who have bad credit. A lender will generally prefer to lend money to people who have a high likelihood of paying back the loan on time. A lender will also be more likely to lend money to someone who has a solid credit history.
If you’re struggling to make payments on a loan that you’ve taken out in the past, then it might be worth your while to ask for a consolidation loan.
In this case, you’ll be able to pay off several high–interest loans with one low–interest loan. You can then choose which debt to pay off first and see how quickly you can start making progress towards getting rid of all of your debts.
When it comes to car repairs or home improvements, it also might be worth your while to consider taking out a secured loan from auto lenders.
This way, you can use the money from auto lenders to pay for a car repair or home improvement project. If you’re able to pay off the loan early, then you’ll be able to reduce your interest rate on the remaining balance.
If you do decide to contact potential lenders to get a secured loan, then it’s important that you only use this money for these purposes.
It’s also important that you pay off the loan as soon as possible so that you don’t accumulate additional interest charges. Late payments will just add more fees on top of the amount that you borrowed in the first place.
Make Financial Changes
There are several financial changes that you can make in order to improve your credit score. Firstly, make sure you are paying all of your bills on time. If you’re paying your bills late, then it could lead to a poor credit score.
You should make sure that you always pay your bills in full and on time, so that they don’t appear as late payments when you submit them to the credit unions.
Secondly, avoid hastily applying for new loans. If there are any high–interest loans on your record, then it might be a good idea for you to avoid applying for new loans until these debts have been paid off completely.
After all, if there are any mistakes on the report, then you could end up paying for loans that you never intended to take out in the first place.
You should also avoid taking out new credit cards or lines of credit when your credit score is under 700. These new accounts will add more negative marks to your report and could lead to higher interest rates when you apply for other forms of credit.
When attempting to get the perfect credit score, many individuals also start cutting the cost of their expenses. However, much of the time they do not consider their insurance rates as a changeable expense.
You should be shopping around for better insurance companies offering better insurance rates twice a year to ensure that you’re getting the best price. By paying less for insurance policies, you’re keeping more money in your pocket for smart spending.
Increasing your credit rating and improving your report is not an easy process by any means. With a few careful steps and helpful financial tools, it might be easier than you think to make improvements that really stack up.
In conclusion, if you want to improve your credit score, it is necessary to do some things that are not obvious. These things are to pay your bills on time, to always have enough money in your bank account and also to keep a track of all the payments you make.
The above information will give you a better understanding of what needs to be done in order to improve your credit rating. By doing these things, you will be able to improve your credit score and become a better person as well.
