5 Ways To Revive Dead Credit

22 Mar

The powers that be created the credit scoring bureaus Transunion, Experian, and Equifax.  Many have criticized these systems for making scoring principles so complex, that it is hard to find someone, even those from the Fair, Isaac, and Company (FICO) business, that understand how scores are decided.  In 2011, the International Non-profit Credit Rating Agency (INCRA) composed of academic and private sector experts came to the conclusion the methodology is biased and needs an overhaul.  Regardless of whether you agree with how your scores are evaluated, though, there are short-term techniques to improve them.

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Get Expert Help To Decipher Your Credit Scores 

Although it is your right as a consumer to get a free credit report annually, many of us fail to do so.  We get caught up in our busy lives, never realizing that sometimes incorrect information is being relayed to the three credit bureaus.  Equifax, Transunion, and Experian are the three amigos, that hold your future in their scoring hands.  Even when you receive the reports in the mail, they may seem like total gibberish.  If you see that your score is 640 or below, it is advisable to hire a bad credit repair service.  These experts can comb through your reports and help you analyze them effectively.

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Pay Bills On Time And Catch Up Missed Payments

This may seem like simple advice, but there are logical reasons people miss payments.  Some consumers are not organized enough to develop a system to remember when each payment is due.  Others lost a job and though back to work have yet to catch back up.  The expert may suggest you write a letter to each bureau and creditor explaining why you fell behind, through no fault of your own.  This also applies to being currently unemployed.  Some creditors may give you a break or allow you to make smaller payments, until you can catch up, now that you are employed again.  Others will allow you to make minute payments, with your unemployment insurance money and not report you to the bureaus.  There is no guarantee, but at least if they are notified, you are not considered a deadbeat.

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Work On Your Financial Obligations Owed 

Since 30-35% of your FICO score is attributed to the total amount of debt you owe creditors, there are some tips you can follow to make headway.  When it comes to credit card and revolving credit, keeping your balances low will help ease the burden on your score.  Paying down your credit cards is always helpful.  Resist the temptation to close out credit cards you don’t use.  Despite the invitations, do not fall for opening additional credit cards you do not need, just to increase your available credit.

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Note Common Myths About Credit

Several popular myths about credit resurface repeatedly.  These include: if you pay off an account that is in collections it will be wiped off your credit report.  Some bogus counseling services relay this fallacy to their customers.  It actually takes seven years, before this is removed.  Another myth is that if you close an account it will cease to show up on your report.  Unfortunately, this is not true either.  Ordering your own credit report will not lower your score, but shopping for better rates over a long period of time will.  If you are shopping for a car, mortgage, or furniture financing, do so within a week so the number of inquiries does not hurt your score.

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Manage Credit Responsibly And Pay Debt Off Timely

The way society works these days you have to have at least one credit card, if not two.  Renting a car requires it.  Staying at a hotel requires it.  Booking a flight online also is done through credit cards.  Just because the modern world insists we function with credit cards doesn’t give you carte blanche, to go wild with them.  Using them in a responsible manner and paying them off on time will demonstrate to the credit bureaus you have earned a boosted score.

Credit bureaus will analyze how quickly you pay off your consumer debt.  They will score you low, if they detect too many high balances for years.  If you have had a $25,000 balance for years and it is barely decreasing, they have a problem with that scenario.  Even if you pay the monthly minimum, they like to see larger chunks applied and an overall balance reduction over time.

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Too Much Debt On Your Books

If you have too much debt overall your credit score will suffer.  For instance, having 10 credit cards with huge balances is not acceptable.  Unless you are making a substantial amount of money, your ability to pay them down significantly is impossible.  The way they view it is even if you make the minimum payments you will never be able to borrow any money because you will be strapped.

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Reviving dead credit is definitely possible.  Working with a credit repair company to help you decipher your credit report is a great first step.  These other five methods mentioned above will also help toward gradually getting the credit score you deserve.

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