The FICO score is a reflection of debt repayment patterns over time. Recent information is usually emphasized.
To improve a credit score, you must take the following steps:
- Pay bills on time
This is a major contributor to one’s score. Paying your bills on time will definitely improve your credit score over time. Even if you owe small amounts, it is essential to make the minimum payment in a timely manner.
- Minimize high outstanding debt
You should always try to keep credit card balances low. These negatively affect your score and must be minimized for positive results.
- Stop overextending yourself
Open new accounts only when absolutely necessary. Avoid the trap of applying for new accounts just to get a better match; this practice often does nothing to improve credit.
Don’t move debt, pay it instead. This helps repair credit scores. Unused cards should not be closed as short-term strategies. Debt remains on one’s report and therefore may not do much to help repair credit.
- Protect yourself
Always be careful to protect yourself and any information that is sensitive against identity theft and fraud.
When you apply for a loan, the requests appear as an inquiry when a lender investigates your credit history. The amount of debt one already has can be used to show that the person is responsibly managing their financial affairs and thus increases the chances of getting more from the lenders.
No quick fixes
It will take some time to get the scores to improve. Late payments, many inquiries, public record points like bankruptcy, are negative information on your report and time is a good ally. Bad scores don’t disappear overnight, they can be fixed over time.
The closing of revolving accounts can be positive, since the open accounts are less and the amount that can be collected is reduced. Risk factors are important when looking at the effect of certain changes in your credit report and subsequently your score. These risk factors identify the elements in one’s story that have the greatest effect, so that one can take appropriate action.
How long should you wait before seeing the results?
The actions listed above will help you build a good track record, which is reflected in your FICO Score. The time it takes to build a positive financial history after negative changes depends on what prompted the change. Some of the reasons for negative score changes include accounts receivable or delinquent. These negative entries on your report have an expiration period, so time may be on your side; generally, they are the following:
- Arrears remain on the credit report for seven years.
- Many public record entries remain on the report for seven years, although bankruptcies can remain for 10 years; unpaid tax ties remain for 15 years.
- An investigation will remain on one’s report for two years.
Improve your credit score with the tips above and be on your way to healthy reports in the future.