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Advice on what you’re supposed to do to improve your credit score comes a dime a dozen. Live within a budget and pay down debt: It’s all so much easier said than done! What about the stuff that you shouldn’t do? Chances are, you may be working against yourself as you try to boost your credit. For a better financial future, here’s a look at what not to do:
In order to improve your credit score, you must stop relying on your credit cards. You’ll never be able to put a dent in your debt if it keeps growing. Instead, put cards away in a drawer and commit to paying at least the minimum payment each month – if not more. Also, see if you can get an increase in your credit limit. By increasing your limit you will improve your credit-to-debt ratio, so long as you don’t add more debt.
If your credit score is lower than you want, you’ve probably discovered that credit offers include extremely high interest rates and unfavorable terms. This is another reason to put plans for more credit on hold. Another reason is that lenders will issue what is known as a “hard inquiry” before issuing credit. Too many of these, and your score could drop further.
Mistakes happen on the creditors’ end as well. If a payment you’ve made wasn’t noted in your credit history, it’s up to you to catch it. Contact your lender with proof of payment and demand they rectify the error.
You’ll be penalized for late or missing payments until the errors are corrected. In addition you should follow up any phone calls with written notices, so you can be protected by the Fair Credit Reporting Act. Having trouble getting errors removed? Credit repair may be a good option. Here is a review of the top credit repair companies.
It’s hard to know how long it will take for your credit score to improve, even if you’ve paid down a big debt or had an error corrected. Your score is updated whenever the credit monitoring agency updates their data, which can range from weekly to monthly.
Disputes can be fixed immediately, or it may take up to a month. Hard inquires will stay on your credit report for up to two years. However foreclosures and bankruptcies, meanwhile, take seven years to be deleted.
Paying down your debt should be a priority, because it will save you a lot in the long run. If you find yourself watching television or playing games, you may have time for a second job.
Be creative when it comes to developing a second income stream. Any money you make from a freelance project or side gig can go to paying down your debt. Also, focus on accounts already in collections or accounts with only a small balance to show the greatest gains to your credit score and long-term financial health.