Build Credit Rating Up

BILL'S ANSWER

Credit scores are calculated based on several factors, as seen in the table below.

There are several steps you can take to help improve your credit rating, but building and maintaining a good credit score requires diligent effort and a long-term commitment to financially sound living.

First, you should obtain a copy of your credit report from each of the three major credit bureaus - Experian, Equifax, and TransUnion. You can request free copies of your reports by visiting Annualcreditreport.com

Once you have received copies of your reports, you should carefully review them to make sure that all listings, especially the listings appearing in the "derogatory" category, belong to you and are being reported accurately. Credit reports are notoriously inaccurate, with consumers frequently finding listings of derogatory accounts that never belonged to them or that were paid off years ago. If you find any inaccurate listings, you should dispute them with the appropriate credit bureau. The Federal Trade Commission provides a comprehensive guide to disputing items on your credit report: FTC Credit Rating Article.

Clearing up inaccurate derogatory accounts may improve your credit score, depending on the number of inaccurate listings you find on your reports.

Next, you should try to pay off any derogatory items that legitimately belong to you. While paying off these accounts will not make them fall of your report, it should improve your credit by reducing the amount of delinquent debt reporting to the bureaus and preventing the accounts from continuing to be reported as delinquent.

Once you have dealt with you derogatory accounts, you should begin paying down your other accounts, to reduce your debt to available credit ratio. You can safely carry some debt, but carrying too much debt month to month demonstrates that you are financially strapped, and should not be extended more credit. Ideally, your ratio of debt to available credit should be no more than 33%.

Finally, if you do not already have a long, positive credit history, you should begin to build one. You can start by opening a few small credit card accounts, making charges on them, and paying off most, if not all, of the balances each month. By doing this, you will show yourself to be a responsible user of credit, and your credit score should improve with each month you continue to show a positive payment history. If you find that you cannot obtain a traditional credit card because of credit problems, a secured credit card, in which you deposit cash in an account as collateral for the credit line, can help build a positive credit history.

To learn more about credit and strategies to improve your credit score, I encourage you to visit the Bills.com Credit Solutions and Resources page.

I hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

Bills.com