How to Improve Your Credit Rating
...Without Paying Down a Dime of Debt
Are you aware that you don't need to have any money to apply towards paying down your debt in order to improve your credit rating? There are a number of actions you can take right now that can drastically improve your credit rating without requiring you to make a single payment to a creditor. Excited? Read on...
Tip #1: Fix credit report errors
The first and simplest way to improve your credit report rating is to check your credit reports and fix any errors you find in them. Would you believe that 25% of credit reports contain errors? These errors in your credit report will invariably lower your credit rating. To increase your credit rating, carefully check all 3 of your credit reports from each credit rating agency (Equifax, TransUnion, and Experian) to find any errors and, if you find any, take immediate action to correct them.
Make sure, if you are in the process of correcting an error in one of your reports, that you request of the lender in writing that they notify each credit rating agency (all 3 of them) once the error has been corrected.
Tip #2: Communicate with your creditors
The second most important thing to do to repair your credit rating, barring paying down debt of course, is to let your creditors know that you in are in financial straits, and try to make arrangements with them that would more reasonably work for you, and that you could realistically meet. By staying in communication with your creditors and trying to work something out together that works for both of you, you'll typically dissuade them from making negative monthly reports about you to a credit rating agency.
Even though old negatives remain on your credit report, your credit rating will increase each month that goes by without a new negative. Signs of improvement in your financial behavior will eventually overshadow prior negative behavior. All it takes is 24 months of steadily making your minimum payments before you can find yourself quite pleasantly surprised by the improvement in your credit report rating.
Tip #3: Get your credit limit(s) increased
If you're about to apply for a major loan (like a mortgage), you could call each of your creditors and ask them to increase your credit limit. Tell them why. This is a common practice for quickly increasing your creditworthiness in the eyes of potential lenders, and many creditors are quite used to doing it for people. This method increases your credit report rating by raising the amount of available but unused credit that you have.
This last tip may be ridiculously obvious and yet it seems to elude so many people. If your credit rating is sorely in need of improvement - stop using your credit until you get a better handle on it. Live within your means. Say "no" to the kids. Put those credit cards away and don't take them out again until your credit rating has improved.
The best way to improve your credit rating, of course, is to pay your bills and your minimum payments due on time. Barring that, the above mentioned advice should (and will) help.
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