| There's no such thing as the ideal credit repair tip ? only the right tips to suit your unique circumstances. You see, everyone has completely different financial situations, so trying to fit the same type of credit repair tip to everyone equally simply won't be as effective.
The best possible way to begin improving your credit score is to work on ways that are most suited to your own specific financial situation. This means understanding a little bit about how your credit score is calculated and then determine which of those factors could potentially be affecting your score.
Repayment History
A full 35% of your total credit score is calculated from your repayment history. If you already know you have a bad history of late payments or missed payments, then this could potentially be the primary factor affecting your score.
The worse the default is, the more negative your credit report will be. This means things like late payments are not going to be as bad as a bankruptcy or repossession or a foreclosure, but overdue accounts are still negative listing items.
The ideal credit repair tip for people who fall into this category is to re-think your budget and begin making payments on time again. This is where a simple change to the way you pay your bills, such as making bi-weekly payments, can really help your score quickly. You'll also need to find a way to catch up any past-due payments as soon as you can.
Balances vs. Credit Limits
The credit reporting agencies calculate a full 30% of your total score based on the outstanding balances on your available credit. When lenders consider your eligibility for a new credit application, they look closely at how you've treated your financial obligations with your past debts.
If you have several credit cards with balances up as high as the available limit or a home equity loan that is fully drawn, then this will negatively affect your credit score. Ideally, your balances should be no more than 30% of the total credit limit available to maximize your score.
The perfect credit repair tip for people in this situation is to work on ways to reduce your balances. This could mean finding a few unused items to list for sale on eBay or holding a yard sale to raise some quick cash to pay down your debts.
The next 15% of your credit score is calculated by factoring the length of time you've had credit. Many people seem to push the credit repair tip of keeping old accounts open and closing newer accounts as they think this might help raise your total score.
A more realistic credit repair tip is to make responsible, timely repayments on all of your outstanding debts, regardless of how old they are. After all, you don't want to keep a car loan or personal loan operating for longer than you need to. If you make payments regularly and pay it off, this it will be listed positively that you had an old debt that you were responsible enough to repay on time.
The final two sections of your credit score account for 10% each and they are calculated by considering the types of credit you apply for and the amount of times you apply for credit.
The best possible credit repair tip for people with a lot of unsecured debt and a lot of credit enquiries showing on their reports is to spend a few months working on reducing balances, repaying debts and not applying for more credit. These simple actions will have a bigger effect on some of the other sections of your credit score, but they'll also improve these smaller areas at the same time. |