4 Simple Steps To Excellent Credit

We live in a credit nation. The mistakes in handling credit are well documented but even so no one would dispute the importance of having good credit. Your credit score, when handled properly, can give you many advantages to creating wealth through leverage. Here are some credit basics to improving your scores.

Step 1: Determine what you have that needs to be fixed. You will want to go directly to the sources of your credit and get your reports from www.equifax.com, www.transunion.com, and www.experian.com. These are the bureaus that your creditors report to and it is important to see exactly what items are either incorrect or derogatory.

Make sure that you get both your credit report and score. Do not waste your time with a so called free credit report service as those are usually a waste of you time. They are usually trying to sell you into some monthly credit monitoring plan that is expensive and unnecessary.

Once you receive your reports then take note of each one separately. All three bureaus report based on different matrices and will reflect different information. Note what items are derogatory. A derogatory item is any item that is listed as a public record or that has a late payment.

Step 2: Dispute. When you begin the dispute process always write your dispute letters in your own words. Do not use the forms provided by the bureaus. Disputes are handled by real people and should be treated as such. Employees at credit bureaus are trained to sniff out credit repair companies and false disputes so you are always better off putting the dispute into your own letter in your own words.

Do this with all inaccurate information on your report. It is not very hard to do and can raise your score very quickly. If the credit account in dispute is yours, and it is currently an open account, then you should contact that creditor directly. Many times a creditor will remove derogatory items at the request of a current client. In some cases putting pressure on the creditor by threatening to close your account will get them act quickly on your behalf.

Step 3: Sit it out or Pay. Eventually almost all derogatory credit will come off your credit report after 7 years. In some cases you are better waiting it out then investigating. If you are close to the 7 year period then investigating the account could reactivate the derogatory and you will see an immediate drop in credit score. So take care in disputing an item that is old and that you cannot prove to be incorrect.

Another thing you can do to improve your scores immediately is to pay down current credit items such as credit cards with higher balances. A good rule of thumb is that your balances should be no more than 50% of your available credit and preferable as low as 30%. If you have one card with a zero balance and another with a higher balance then you are better off transferring a part of that balance to the free and clear card.

Step 4: Be careful establishing new credit or closing old accounts. Most people don't realize that a simple act like closing out an old account that you have not used for a while can lower your score. One of the contributing factors to your score is the length of time your credit has been established. That means that older accounts, even those no longer used, will have a favorable effect on your credit score. Never close out old especially if you are in the process of applying for a mortgage or loan.

If you're reading this then you know the importance of maintaining excellent credit. These simple steps will help you improve or maintain your credit. Sometimes it is helpful to obtain professional help from a credit repair agency but before you spend the money these simple steps may do the trick.

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