Tips for Establishing Credit or Repairing Credit Quickly

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Whether your credit is damaged or simply non-existent, establishing a credit history takes time, consistency and strategy. While contemplating an approach, it is imperative that you understand your credit rating first.

A credit report is a reflection of past and current debt loads vs. income that lenders use to measure the risk of loaning an individual money.  The higher the amount of trust you have built up, the lower your payments will be. Therefore, having a good credit score, or rebuilding your score, can only help you in the long run.

Repairing or establishing credit is not easy and is time consuming. You should check your credit report at least once a year to correct and detect any erroneous or unauthorized activity. For those people who are willing to pay a little extra for security or 24/7 access to their credit scores, by all means, a full credit freeze, or credit monitoring services that include a FreeScore, can be effective options.

Lenders know that your credit score is based upon five factors, all of which weigh upon your score in a different way. Your payment history is the weightiest factor, and equates a full 35% of your score. The balances you carry vs. current income is also a strong determining factor, which accounts for 30% of your score. Your past seven years of credit history is responsible for 15%, while accounts you have open are 10% and credit inquiries equates the remaining 10% of your score.

To get the highest score in the least amount of time, a lot of effort is required. First, you need to find the right credit card company -one that isn't going to charge sky-high rates. Often times, Visa will offer people with low credit scores an opportunity to raise them by offering a card with low initial spending limit, with an annual fee. Nobody wants to pay a credit card company an annual fee, but today it's usually unavoidable, at least until you're are able to raise your credit rating.

In order to raise your score quickly, keep your personal information up to date. Do not move residences and forget to update your creditors. Simply forward your new address to them along with your monthly payment. Changing jobs? Get a raise? Update that information as well.

If you have been rejected for credit recently, stop applying! Too many credit applications within a short period of time are very detrimental to your score. If you are rejected once, it will show up on your report and other lenders follow suit. It's far better to check your own score and ask lenders what their requirements are for credit scores from applicants before submitting applications again.

Keep up to date with all payments. This goes for utility bills, phone bills, rent and all other bills. Paying on time every month is the best way to raise your score. If you are behind on your bills, don't apply for credit you cannot afford. If you unable to pay your rent today, the likelihood of being able to make a credit card bill payment plus rent next month is highly unlikely in the eyes of the bank. The only way to prove yourself worthy is to get caught up and stay that way. Only then will lenders see you as a good investment.

Adjust your debt utilization ratios. If you are nearly maxed out on one card and only use a small percentage of your credit with another card, you need to move part of your debt off of the nearly maxed out card and put it on the other card. Borrowing too much or too little can negatively affect your score, even if you do make payments on time. By dispersing debts and placing them evenly throughout your revolving accounts, you can boost your credit score significantly and the effect is nearly instantaneous.

Consumers with poor credit scores often have trouble applying for a car loan and locating a car dealer that's willing to work with them. Consumers with damaged credit are often unaware of many of the problems they may be facing in applying for an auto loan. If you have nonexistent or bad credit, you may want to try companies like who matches people with auto credit difficulties to those new car dealers that can offer them their best chances to help you obtain a reasonable loan.

If you're too close to your limit on your cards, transferring balances makes no difference. Instead, you may want to try raising your credit limit. Credit card companies rarely do this without being asked by customers. It doesn't hurt scores to ask, so what do you have to lose? Ask away! If they agree, your credit utilization ratio becomes better balanced and your score rises very quickly.

Other ways to boost your score include closing generic credit card accounts, paying off large debts, refinancing for a better interest rate on current debts, keeping accounts with major lenders open and active and keeping a close eye on your credit report in order to detect mistakes and monitor for identity theft.

By following these tips, you will notice a rapid increase in your credit score. As a result, lenders will approach you with offers of credit rather than you approaching them. Remember: on time payments, balanced debt loads and utilization ratios are the keys to successfully boosting your score.

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1 Comment

Wow, this is an eye opener. I've always found the whole process of determining credit scores never know what they are looking at. Its certainly helpful stumbling across this post.
I think a lot of people make the mistake of having many inquiries on their score thus increasingly affecting it, maybe because of ignorance or genuine lack of knowledge.
Bottom line is, be consistent in your credit usage, do it responsibly and be patient.

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