Best Ways to Get a Better Credit Score

If you want to avoid paying higher interest rates, and you want to increase your chances of getting a loan, it is important to have the best credit score possible. For many Americans, debt and the problems in the housing market have taken quite a chunk out of their credit score, but luckily, there are many ways that you can easily manage your credit score and start to see some real benefits from your efforts.

The first step to take before you get started is to set up a credit score monitoring service. This will help you see what you are working with and give you incentive to keep on going. The best monitoring services will give you a daily look at your credit score and you can see the changes on a daily basis. This will help you gauge the efficacy of your efforts and help you craft a better strategy for managing your credit score.

Once you have a monitoring service in place, you can begin to work on your credit score. You’ll want to target any existing collections, if you have them, since these can really drag your credit score down. Go over your credit report and see if you have any on file. The report should include contact information for the collections agency and you’ll be able to see how much you owe.

Instead of immediately sending off a check to the agency, you’ll need to first put together what is called a Pay for Delete letter or PFD. This basically informs the agency that you are willing to pay off the debt, but only if they agree in writing to remove the record from your report in exchange. Do not send payment until you get the signed agreement back in the mail. This can be forwarded to the credit reporting agencies if the collections agency fails to remove the record after you’ve paid.

The next step in raising your credit score is to lower your overall balances. If you have a high ratio of debt to available credit, this is going to affect your score adversely. You don’t necessarily need to pay off all of your balances, but you should get them as low as possible. If you have a good payment record with a creditor, you can also request a credit limit increase, since this will make your ratio more favorable.

During the time when you are trying to manage your credit score, it is best not to apply for any new credit. This creates what is called a “hard pull” on your credit report and this can result in a reduction in your overall score. It is best to wait until you have your credit score where you want it, and even then, you’ll want to limit your requests for new credit to around two or three a year.

Following these simple strategies can help you see a large change for the better in your credit score. Staying current on all of your bills is the next step to maintaining that score.

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