Reduce the amount of debt you owe, This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.
When a creditor reviews your application for a loan or credit card, they’ll check both your credit report and credit score to determine your creditworthiness. Based on that and other financial information, they’ll decide if you qualify for a loan or card. If you do, you’ll receive a higher interest rate if you have poor credit because they think you pose more of a risk of defaulting on your payments if you have a rocky financial past.
New credit tips: Do your rate shopping for a given loan within a focused period of time: FICO Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
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Collections are complicated because paying them off may actually end up hurting your credit score by resetting the start date from when it was reported. Before taking action on collections, read on to find out how to navigate these murky waters. Like charge-offs, collection accounts may be reported for up to seven years from the date you first fell behind with the original creditor.
Contact Your Creditors – Do this immediately to set up a payment plan if you miss payment deadlines and can’t afford your monthly bills. Quickly addressing your problem can ease the negative effects of late payments and high outstanding balances. Apply for New Credit Sparingly – Although it increases your total credit limit, it hurts your score if you apply for or open several new accounts in a short time period.
