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How to Really Improve Your Credit Score

By: IndustryReview.Net

Related Links:

Improve Your Credit for Less Than $50

CNN Money’s Debt Reduction Planner

There are many companies, both online and offline, who claim to be able to increase your credit score by hundreds of points. So, do these systems really work? We look at some tried-and-true methods for improving your credit without spending a fortune.

Hire a Credit Improvement Company or DIY

Let me first tell you that these companies can and do improve credit scores. The problem with this industry isn’t that they are ineffective; the problem is that they are very expensive. To give you an idea, IndustryReview.Net contacted several credit repair companies to compare prices. We found that a full service firm will charge between $250-$1,000 with no specific guarantee of how much your FICO score will improve. Thinking about this logically, it seems clear that those who are the most in need of credit help probably don’t have an extra thousand bucks to drop. The other consideration here is that this is not magic. These companies have simply figured out who to call, what to fax, and how to dispute negative credit items. This information is available en masse via the Internet and, with a little legwork, you could probably buy a book

for a lot cheaper and get the job done yourself.

Don’t Close Unused Credit Accounts

Many people will make the error of assuming that if they consolidate debt and close accounts, this will improve their credit. In fact, this could actually be harming your credit. Banks and credit bureaus use your debt-to-limit ratio as part of the criteria in rating your credit worthiness. For example, if you have two $5,000 limit cards and each has $2,500 charged to it, your total credit limit is $10,000 and you have used 50%. Now, if you consolidate those both onto one card, and close the other, your credit-to-limit ratio just went from 50-100%. Your best bet is to reduce the debt, rather than reshuffle it.

Make Sure You Know Your FICO Score

Many people will check a credit report and assume that’s enough. The fact is, different negative items on your credit affect your credit score in different ways. For instance, having a late mortgage payment can reduce your credit score much faster than a late car payment. Knowing your score will give you the best chance of understanding your true credit status. For now, only Equifax offers your actual FICO score. The other two agencies, Experian and TransUnion have their own, proprietary scoring systems. You may have to spend a few bucks for a report, but it will be worth it.

Understanding how credit works is an important step towards repairing bad credit. Once you crack the code, you’ll be well on your way to getting the best rates and the credit you need.

Links:

Improve Your Credit for Less Than $50

CNN Money’s Debt Reduction Planner

Brian is a small business owner, Web design professional and Internet marketing veteran. He blogs at IndustryReview.net. He has worked with small businesses in dozens of industries to help them develop online marketing strategies. You can contact Brian at BrianforHelp@industryreview.net.

This article is free for republishing
Source: http://www.articlealley.com/article_190323_19.html


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