Credit scores are dull and hard to understand, like many facts of life. However, if yours is keeping you back from loans which you really want, you’ll need to manage it properly. One of the annoying things about your credit score is that it’s influenced by things you’ve done years ago. Although there’s nothing you can do about that, there are various steps you can do to improve your future credit score.
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The first piece of advice I can offer: don’t be afraid to negotiate with creditors. Perhaps you stopped paying a credit card bill when you became unemployed? Yes, this looks bad, and you can’t deny it happened. However, it’s perfectly normal to ask a creditor to “erase” that debt, and any other account which has gone to collection. Simply write a letter to your creditor, offering to pay the outstanding balance if they’ll report it as “paid as agreed”. Depending on your situation, they may even erase the account altogether! Be careful here, though. Unless the creditor agrees to such a proposition in writing, they’re under no obligation to uphold their end. Make sure to save some proof of the agreement before making the payment.
While certain outstanding issues can be a blemish on your credit report, not all debt is bad. If you’re paying off a car, don’t scramble to have it erased the minute you make the last payment. Negative items are harmful, true. However, most of these will be erased after seven years. What’s even more harmful to your score is arguing with a creditor trying to get old, paid accounts off your report. “Good debt” may sound like a contradiction in terms, but in the world of credit scores it’s very real. Debts which you’ve handled responsibly, and paid for as agreed, can help your credit score a lot. The longer you keep up a pattern of “good debt”, the better your score will be. Because of this, try to leave old debts and stable accounts on your report for as long as possible.
So what if you’ve already explored several options, and are still stuck with a bad credit score? You might want to look for a professional credit repair service. The fees for these services can be a little steep, but the benefits last for years! These are professional law firms which analyse your accounts and create a bespoke plan of action for the individual. Whether it’s a late payment or a full-scale bankruptcy, you’d be amazed at what these firms can do! Don’t think it’s the miracle cure to any problem, though. If you ask them to target items which aren’t your biggest problem, you could end up wasting a lot of money.
I hope these pointers have brought you closer to the credit rating you want. After you’ve stabilised your score, try not to slip into any old habits! A large part of maintaining a good credit score is constant foresight. Think about how every last financial decision will affect you. A bit of self-discipline goes a long way!
