How To Fix My Bad Credit Score-Did you know that 1 in 4 credit reports contains errors or omissions? And if it goes undetected can hurt you financially. Think about this for a moment. If the studies are correct and statistics say that they are then that means 1 in 4 people have a bankruptcy that shows on their credit report and they never filed for bankruptcy.
You should make it a rule of thumb to review your credit quarterly or four times a year. This way you will catch things before long and rectify the situation immediately. With today economic times being prudent by keeping a watchful eye over your credit report. Having a magnifying glass when reviewing your report will turn up discrepancies immediately. And it is within your rights to challenge any errors that you may find.
Open a New Checking or Saving Account
Go down to your local bank or
credit union an open a new checking or saving account. Deposit into either account about $1,000.00. The following week go back to the bank and apply for a credit card. Since you have little or no credit your banker will love the fact that you strengthening your ties with them.
More than likely they will offer you the credit card. Or they may want to use the $1,000.00 as collateral that you deposited the prior week. Either way it's a win-win. If they offer you the credit card without collateral it's great you'll be further ahead in this game of monopoly.
If by chance they want to use it as collateral that's fine too. Just know that if you should default on paying the bank back they will keep your deposit. Your goal here really is to establish regular consistent payment activity with this new credit card.
Be sure to keep you debt ratios low.
What I mean by this is you never want to charge more that $400.00 on this credit card. Ideally, you only want to charge small amounts like $25, $50 or even $100 and pay them off in full at the end of the month.
Should you decide to charge up to that $400.00 amount, then be sure you can still pay it in full at the end of the month. Otherwise don't do it because you will be defeating the purpose. Consistency is the real key here. The goal is to establish a good payment history with on time payments.
Revolving Debt
According to Wikipedia revolving debt is “credit card debt, retail card debt and some petroleum cards. And while home equity lines of credit have revolving terms the bulk of debt considered is true unsecured revolving debt incurred on plastic.”
What creditors are looking at here is the fees that you have to pay monthly such as your Macy's credit card or Sears charge charge. You need to have both revolving debt and installment loans because it accounts for 30% of your FICO score.
Here is a summary of what the creditors look at when making a determination about whether or not to grant you credit.
#1. Creditors need to know how many credit inquiries have been made against your report? This can account for as much as 10% of your FICO score.
#2. From there creditors want to see the type of experiences you've had with credit. Do you have revolving of installment loans and what success have you have with these types of debts. Chalk up another 10% of the credit pie.
#3. Are you a newbie when it comes to credit? Creditors will ponder this questions and seek answers by reviewing your report. They need to know how long you have been granted credit? And how well you handle the responsibility of your debts?
They will consider things like on-time payments. Late payments. If late, how many times late? Are you a slow payor? They will be looking at all kinds of payment patterns to paint a picture of you really are. Slice off another 15% of your FICO score.
#4. Now we get to the meat of what creditors are really looking for. One of the biggies they will ask themselves is what is your debt load and what type of debts are your carrying?
Is it a mortgage loan, car payment, student loan payments, insurance payments (whether for house or car), etc? Are they life insurance payments, retail or credit card payments?
All these questions will have to be answered.
Now the picture is becoming clearer and clearer about you as an individual. This slice of the pie can add up to 30% of your score.
#5. Last, but not least the final piece of the pie comes into full view. Now, they have a complete picture of who you really are by putting in this last piece which is your over all history of your payments.
From when you received that first credit card to when your purchased your last home. It's all in there for everyone to see. Just how good you are at keeping your commitments.
Or whether you fold like paper when things get a little rough. This last piece of the pie can make up to 35% of their total assessment of your character. Ouch! I hope you've been credit worthy.
I've just given you a couple of tips on fixing your bad credit the easy way. As a side note, I just read a press release called “Bad Credit Personal Loans To Help Relieve Financial Pressures”.
Whatever you do stay away from these loans! They will only get you trouble. Keep your eye on the ball. The way to relive financial pressure is to live within your means and build your savings and investment accounts and never, ever forget that.
Article Source: http://www.streetarticles.com/credit/how-to-fix-my-bad-credit-score-the-easy-way
