A good credit history increases the likelihood of getting approval for the best loan, credit card or mortgage deal. Prior to submitting your application, it's important to take steps to improve your credit rating so that you qualify for the lowest rate of interest. Here's some advice and tips on how to improve your credit score.
Check your credit report for errors
A fundamental part of improving your credit rate is requesting a copy of your FICO credit report from all 3 credit score agencies. Under the Fair Credit Reporting Act, every American citizen is legally entitled to this information once every 12 months. This enables you to verify the accuracy of the information that's held about you and get any issues corrected. You are looking for problems in your three credit reports that could lead to a decline. For example, it's worth removing any credit searches that have been duplicated or were never made by you. This is because too many credit applications in a relatively short timeframe could be interpreted by a potential lender as a sign of financial difficulties. It's important to appreciate that the information held by Experian, Equifax and TransUnion is completely separate and unique. Correcting an error at one agency won't necessarily help you to overcome a poor credit rating. If Experian and TransUnion hold erroneous information about you, you need to make contact with both agencies. You should provide the appropriate supporting information that proves that the information recorded is inaccurate. Never send a copy of the original document. Take a photo copy of the information and send it to them by registered post. Credit reference agencies are obliged to act on your request within 30-days of receipt.
How to get good credit reports and scores
If you've defaulted on any of your credit agreements, this information will be recorded by credit reference agencies for 7 years. You've checked your Experian credit file and corrected the errors, but your problems that have been caused by failing to repay your debts on time. You know your credit score, but it isn't good enough to get you a low rate loan. If you already have a mortgage or auto loan, continue to make the repayments punctually. Consider signing-up for a couple of credit-building credit cards because you need a form of both revolving and instalment debt to boost your credit score. If you have savings, use these to reduce your debt. Your income-to-debt ratio must be below 36%. The less money you owe, the lower the risk you present to the lender. Only use 30% of the credit limit on each card in any one month. That's how to get good credit more quickly.