This is a guest post. Josh Wilson, is a Millennial working to achieve a perfect credit score. Josh loves improving his score and maximizing the benefits of great credit. That is why he is writing today about the 3 tips to raise your credit score and avoid scams!
A credit score is a numerical number that represents a person’s credit files, based on their credit-worthiness. The number comes from credit reports that credit bureaus create, based on the information they receive from banks, credit card companies and lenders to determine a person’s potential risk.
While there are several ways to positively raise a credit score, there are just as many scammy services online that claim to help raise credit. In addition to online advertisements, some people also fall for the small, political-like signs on the side of the road that prey on those with poor credit.
Credit Scoring Scams to Avoid
According to Forbes, there are four costly credit score scams that should be avoided. While there are reputable credit repair companies that charge a fee to help individuals dispute or remove inaccurate information on a credit score, there are just as many scammy credit repair companies.
If a credit score company promises to remove negative information from your credit report, even if the information is true, this is a scam. Next, if the company asks for a fee upfront, it’s also a scam, as federal law requires services to be completed before payment is due for credit repair.
Finally, if they promise to create a new credit identity or ask you to sign any blank paperwork, it is likely a scam company. New credit identities means falsifying information and blank paperwork could mean anything, so don’t trust any company who asks you to do anything of these things or makes similar false promises.
Now, let’s discuss three ways to actually raise your credit score…
1. Lowering Your Credit Utilization
Essentially, credit utilization means the ratio of credit card balances to your limits. If your balance is $400 and your credit limit is $1,000, then your credit utilization for that credit card is 40 percent. Obviously, the best way to keep your percentage down would be to pay the credit card, but there are other ways to improve the ratio.
Since a high credit utilization can hurt your credit score, one way to lower your ratio would be to ask for a higher credit limit. This way, you can lower the ratio even when you don’t have the money to pay more money all at once. You could also transfer your balance onto a non-revolving product such as a personal loan, as taking out a loan can improve your credit. However, if you feel like you may then spend more, this could mean simply digging a deeper hole.
2. Checking Your Credit Report for Inaccuracies
As we mentioned in the scam section, there are real credit score companies who can help you dispute false claims, but no one can remove a true negative score. That is, unless, you make things right with the company or lender involved.
Let’s say, for example, you owe an apartment complex $1,000 for a move-out fee or some damages to an apartment. If you’re looking to move into another apartment and they find this claim on your credit score, it’s possible that they could let you pay that former apartment, bring in proof, and allow you to lease the new apartment.
While this will not remove the poor review from your report, it is one way to bypass the problem. That said, if something similar happens but the name on the report isn’t actually you, this could be identity fraud. Under the FCRA, both the credit reporting company and the information provider will need to correct the report.
3. Setting Up Automatic Payments to Avoid Late Fees
While credit card companies do make extra money on late fees and high interest charges, they still want their customers to be able to make automatic payments to make life easier on both sides. To set up an automatic payment with your company, visit the website, app, or call to ask about automatic payment systems.
Generally speaking, most credit card companies will have you automatically pay some small amount, such as $25 a month or so, in order for you to be listed as paid that month. However, there are other options, especially if you have a larger balance or larger purchases. It’s possible to set up full monthly payments on some plans.
Avoiding Scams and Improving Credit
While there are scammy services out there that may offer to remove negative scores, take a fee upfront, change an identifying number, or have you sign blank paperwork, there are also actual companies who can remove negative scores if the information is truly false.
Besides hiring outside help, individuals can lower their credit utilization, check their credit score for inaccuracies, and set up automatic payments to avoid late fees in order to improve their credit scores over time.
Do you have any tips to improve your credit score? I would love to hear them in the comments below!