Since hitting rock bottom during 2008, average credit scores have been steadily rising and are now at a record high. This is good news for borrowers, but a credit score can soon be brought down by defaulting on an account or simply missing a payment. Not all debt is bad, but even though they have good credit scores, a recent survey revealed that more than a quarter of Americans have financial commitments beyond safe loans and mortgages. As well as dealing with credit payments responsibly and in a timely manner, credit reports themselves can also be regularly checked and maintained to ensure that credit scores remain high and accurately reflect your current financial situation.
Remove Late Payments
Several aspects of your financial situation can affect your credit score, but 35% is dictated by payment history, making it the most influential factor. Bankruptcy, foreclosure and other serious payment issues will severely damage your credit score, but even smaller late payments will be detrimental. The most effective way to maintain a good credit score is to manage your payments responsibly and ensure they are always made on time. However, even if your score has already been affected, you can use these 4 ways to get late payments removed from your credit report. Repairing your report in this way will give you a better chance of being approved for cards and loans in the future, and give you access to better interest rates and insurance premiums.
Check Your Report For Errors
As well as addressing previous financial mistakes, it’s important to be aware of other errors for which you are not responsible that may still be lingering on your credit report and lowering your score. Rather than assuming that your credit report is correct, you should check it regularly to ensure that it accurately reflects your present financial situation. You can request a copy of your credit report free of charge every year from each of the three credit reporting companies, TransUnion, Experian and Equifax. If you alternate your request between the companies every four months, you can then regularly monitor your report for any mistakes throughout the year.
Time Your Searches
As well as regulating the verification of your report, it’s a good idea to think carefully about shopping around for credit cards and loans, and concentrate your mortgage searches within a limited time period. FICO scores will look at how many inquiries you make, but also take into account the length of time taken for these searches. For example, if you are checking out mortgage rates over a few days before taking out a product, this will be flagged up as acceptable research and recorded as one check. However, multiple inquiries or applications for credit cards will be seen as evidence of a higher risk consumer.
A good credit score depends on avoiding bad debts and making payments on time. However, even when marked by late payments or by inaccurate information, a credit report can be improved. Borrowers who monitor their reports regularly, and who are mindful of the consequences of their financial searches and payment history, can ensure a consistently better credit score is maintained.