Common Mistakes People Make When Improving Their Credit Score

« « How to Use Credit Card Merchant Service | Get Your Credit Score Information And Improve Your Reputation » »

Saturday, April 11th, 2009 Subscribe To Our Feed

If you asked the average consumer what their credit score is, they will probably say I don’t know. This is unfortunate because a person’s credit score affects their ability to get loans, get credit cards, in the interest rates that they will pay him loans and credit cards. There’s nothing particularly difficult about understanding one’s credit score and how to improve credit score. It just happens to be an area that people only pay attention to when it is affecting their lives such as when they go to buy a home or take out a loan for some of the purchase, or apply for a credit card. Everyone should take advantage of the law that allows them to get one free credit report per year at no charge. A simple search the Internet on how to obtain your free credit report will give you all the instructions you need.

Here are the most common mistakes people make when going about the process of trying to improve your credit score:

1. Federal law mandates that the three major credit reporting agencies provide consumers with one copy of their credit report each year at no charge. A law was passed so three years ago that gave consumers the right to see their credit report upon request at no charge one time per year. This is a very simple step and assures that your credit report will always be accurate. Viewing your credit report only after you have been denied credit doesn’t help you. It only starts the process of figuring out how to improve your credit.

2. Consumers who do request a credit report usually do not know how to go about fixing things on a credit report and will just pick up the phone and start making phone calls to all the companies that have reported derogatory entries (a derogatory entry is a negative entry on your report that indicates a problem area). Next to each entry on your credit report is a phone number that you can call to the company reported the derogatory entry. And let you know how to go about talking to these people, they are have the advantage because they deal with people going about their credit reports every day. Consumers should take the time to learn some of the basic do’s and don’ts of what they should and should not do when talking to companies that have reported derogatory credit entries.

3. Another mistake consumers commonly make is allowing companies to make excessive inquiries to the credit reporting agencies on their credit. Most people don’t know it but each time an inquiry is made, your credit score is reduced by a small amount. The reason for this is that the credit reporting agency assumes that if you are shopping around too much for credit you must have problem areas they are trying to take care. Of course that may not be the case for any particular individual, but statistically it is true that people who have excessive inquiries on their credit report usually also have poor credit. There will be a listing on your credit report of every inquiry made. You can use that listing as a starting point to contact the companies that made the inquiry and verify that the inquiry was valid and approved by you.

4. The fourth common mistake that people make regarding their credit report is not staying on top of it each year in making sure that all of the entries on the report are accurate. Once you do the initial cleanup of your credit report, an annual review is a fairly straightforward and fast process. This is because you already know your way around the credit industry and are able to take corrective action quickly and correctly. Plus, there should be fewer derogatory entries on your credit report as you are presumably going to be more careful with your credit the more you know about it.

Consumers who are proactive about how to improve credit score can have a much easier time and many more opportunities to borrow money at attractive interest rates even when the economy is poor such as it is today. For example, there are many very attractive real estate investments one can make with the depressed real estate market right now. However, if you have poor credit your chances of getting loans make any real estate investments are slim to none as banks have tightened the restrictions so much that only the very best credit scores are able to acquire credit.

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.