Installment loans also act as a cushion for your credit score. If you have only revolving accounts such as credit cards and retail accounts to calculate a credit score and you miss a payment, having an installment loan will help balance out the information used to calculate you credit score. Any hit your score might take because a missed payment will not hurt as much.
Adding lines affects all categories of credit but inquiries, and adding lines will increase your available credit, thus dropping your overall utilization. All credit cards should be under a 30% utilization, and ideally under 10%, at all times. If you have utilizations over 30% then it won’t be adding tradelines that does the most help, but paying down your existing balances. Balance transfers can also help reduce a high utilization on a particular card if that is an option.
Collection accounts, bankruptcies and other black marks can heavily damage your score, so clearing such derogatory information from your credit reports could give your score a fast and substantial lift, especially if the information has been on your report for less than two years, says Gerri Detweiler, credit expert and education director for Nav, a site offering credit scores and information for businesses.
Focus on correcting the big mistakes on our credit report. If someone else's bankruptcy, collections, or charge-offs are showing up on your report, you'll likely benefit quickly by having those removed. However, if an account that you closed is still being reported as open, it's probably best to leave it that way. Having an account reported as "closed" on your file can in no way help your credit score and could actually hurt it.
If you find information that is incorrect, you can file a dispute. Remember too, that items on your credit report that you don't recognize could also be potential signs of fraudulent activity — someone working to secure credit in your name for their own use. Make sure you're clear on items that could potentially be fraudulent, versus those that may simply be inaccurate.
Pay attention to the calculation of a credit score as well. If payment history is 35%, paying off one or more credit card balances can have a fairly significant impact on your credit score - and a quick one too. An unpaid credit card balance is a much less significant form of credit than a mortgage or bankruptcy claim, so in 1-3 months paying it off will likely show in the form of a better credit score.
You may, on your own, notify a credit bureau in writing that you dispute the accuracy of information in your credit file. The credit bureau must then reinvestigate and modify or remove inaccurate or incomplete information. The credit bureau may not charge any fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit bureau.
Thank you for this. I have been building my credit back after Economy struggles and long term illness. Today, I'm in a better position physically and materially. Most of my credit issues are resolved. However, I'm curious as to your next step once you resolved the medical bill situation. Did you pay the creditor and subsequently write a letter to the credit bureaus? I have a $284 medical bill I can't recall not paying, but I would like to resolve the matter this year.
Credit age (how long your accounts have been open) has a moderate impact on your credit score. Lenders generally want to see that you have at least three open and available sources of credit, where you are current on your payments. The longer you’ve had your account open in good standing the better. Keeping accounts open maintains your credit age and, as mentioned, helps with credit utilization.