Improving your credit score

15 Jun

If the type of lending you are seeking requires a personal guarantee then your personal credit score, not the score of the business becomes a major factor.   Generally anything less than 600 means you are going to have an extremely difficult time getting funding on your own.   But don’t give up, you can usually improve your credit score by taking a few simple measures.   Here are some pointers

1.  Get a copy of your credit report directly from the credit reporting agencies.  The credit bureaus -- TransUnion, Equifax, and Experian -- are required to give you a free copy of your report once a year. Credit reports commonly contain errors.   Identify the errors and follow the reporting agencies guidelines for requesting the negative report(s) to be removed.  This can normally be done online.   When you put a late payment or collection into dispute the reporting agency goes back to the creditor to verify or correct.   It’s their responsibility to do this and if they don’t the entry has to be removed from your report.

2.  If you were negligent about a debt for some reason but are willing to pay it you can contact the creditor and explain the circumstances, offer to pay it off immediately and ask them to remove it from your credit report field.   They will frequently do this for you as a favor especially if they anticipate future business with you.

3.  Your credit card utilization affects your score.  In a nutshell credit utilization is the ratio of how much credit you have verses how much you have used.   For example if your total credit lines are $50,000 and you have $25,000 in balances than the ratio is 2:1.   You can improve the ratio in two ways, paying down balances, or increases your credit limit.   You can also open up another account and keep the balance low or zero.

4.  Pay off balances starting with the high interest credit cards.  Pay off the newest ones first as the age of an account is favorable to your score.  IOW the longer you have the account open in good standing the better in reflects on your score.

5.  Time is on your side.   Late payments and charge offs don’t stay on there forever.  Usually after 7 years they are gone.  So the bottom line is stay current on your accounts and over time your credit scores will gradually improve.

There are other more sophisticated techniques for improving a credit score.   For a more in-depth look at the various factors that affect your credit score and how to improve it I recommend that you check out The Balance website.

 You may also wish to utilize a professional credit repair service company to take care of all of this for you. I recommend   as an excellent source for this service.    They are highly professional and do a top quality job for you.   Their fees are around $100 per month.

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