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Question for the Money Doctors

Question submitted on Mar 26, 2019.

Question

Hi. My husband and I are still trying to clean up our credit reports with poor ratings. We suffered major financial losses after the 2008 recession and have not been able to put any savings aside since 2010. Aside from selling our home and cars, what can be done to get our credit ratings up?

Answer

There are many ways to boost your credit rating.  The chief way to do this is to pay off outstanding credit card balances in full monthly, as well as routine bills that you incurred on credit such as mortgages or auto loans.  Consistently paying off balances this way, over a long period of time, will prove that you are a good credit risk.  Even if you are not using a particular credit card, it would be best to keep the access to this debt rather than eliminating it from your credit report.

 

It would also be wise to frequently check your credit report with each of the three bureaus, Experian, TransUnion and Equifax anddispute any errors.  https://www.annualcreditreport.com provides an opportunity to review your credit reports each year at no charge.  You could consider asking for an increase in credit limits that would improve your debt to equity ratio as well.  If you are having trouble paying down credit cards, consider negotiating terms with the bank or obtain a balance transfer if financially prudent.  Try not to have too many inquiries on your credit as well, especially during a short period of time.  If you are considering home improvements, negotiate with the lender and see if you can finance at a low rate over a longer term.  This will expand your credit history and lend to higher credit ratings over time as well.

 

By having a budget and debt management plan, implementing these ideas and living within your means, it is possible to improve your credit rating.  This will give you better financial options in the future. You can eliminate late charges and lower your financing costs, allowing you to use these savings to your benefit.


For additional information visit http://www.360financialliteracy.org/

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