STEP 1
Get your credit report and look for errors.
These days getting a credit report should be the no-brainer first step toward improving your chances of landing credit at the best price possible.
Simply go online to AnnualCreditReport.com, the ONLY federally-sanctioned and cost-free service, and obtain a free credit report from Equifax, Experian and TransUnion. Given the year is more than half over, get your report from at least two companies, perhaps three. Next year set up your own credit monitoring service by getting a report from a different company every four months. Again, through AnnualCreditReport.com, each report is free.
STEP 2
Check credit limits and attempt to keep balances evenly distributed across credit lines, advises attorney Edward Jamison, with the Los Angeles, CA Jamison Law Group he founded to specialize in consumer credit and identity theft.
Make sure your maximum credit limit is reported for each account.
"When no limit is reported, credit scoring software presumes the account is 'maxed out'." Jamison says credit scoring software scores more favorably when the balance is 50 percent or below, but too many open accounts with zero balances could lower the score with the assumption you could suddenly run up a lot of credit.
STEP 3
Keep some credit cards open. Close others. Open credit cards with limited balances and good payment records raises scores, especially long-time credit cards. However, the accounts should be limited in number and well-managed.
"Closing credit card accounts can hurt your score unless the accounts were opened less than two years ago, and you have more six credit cards," says Jamison.
It's about striking a balance.
STEP 4
Where possible, get rid of late payments listed on the credit report. Jamison says if your late payments are dated and you've been a good credit customers for some time creditors may, in good faith, adjust your statement. "If you are a customer in good standing, the creditor may work with you," he said.
The effort isn't easy. A demanding, frustrated and rude approach will make it more difficult. The lender isn't required to remove dings for 7 to 10 years in some cases.
Pay off collection accounts and past due amounts. Payoffs and paying past due accounts start the clock running on how long the ding will remain on your report. In some cases the collection agency or creditor may remove the ding. Again, it's not easy.
STEP 5
Likewise, whenever possible, seek to have charge-offs and liens that are less than two years old removed.
"Charge-offs and liens that are older than 24 months do not affect your credit score nearly as much as ones under 24 months," says Jamison. "But if they're newer than 24 months, they can seriously damage your credit," revealing you as a more recent credit slacker.
Keep in mind, all efforts to improve your credit, other than correcting errors, are typically based on you being a mature credit consumer -- pay your bills on time, don't overload yourself with debt and get in touch with lenders at the first sign of trouble for workouts than can help save your credit or reduce the damage to your report and your credit score.
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