How to Improve Credit History
Having a positive credit score makes it easier to secure credit and qualify for lower interest rates. But making late payments and having high balances on credit cards can hurt your credit history. There are a few simple steps you can take to improve your credit history, such as reviewing your report for errors and minimizing the frequency that your credit is run.
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Instructions
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Order a copy of your credit report. Annual Credit Report (see Resources) provides a free credit report from all three credit bureaus--TransUnion, Experian and Equifax--every 12 months. When evaluating your credit history, look for incorrect reporting of late payments or high balances. If you find any discrepancies, contact the bureau reporting the error and request a corrections form.
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Resolve delinquent accounts. It's expensive to write off loans, so creditors are motivated to work with individuals to settle delinquent accounts. Contact your creditor and negotiate a reasonable amount to pay monthly. After you pay consistently for a few months, your credit history will improve.
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Set up a system that ensures creditor payments are made on time. This can be achieved by setting up automatic payment through your checking account. Check out your bank or credit union's online banking function to establish automatic payments.
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Keep credit card balances less less than 30 percent of the total available credit. However, if your balances exceed this ratio, your credit score will be hurt.
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Continue to use your credit. Some people think that discontinuing the use of credit will improve their credit rating. This is a misconception. If you have challenges getting credit because of negative credit history, apply for a secured credit card. This will require a security deposit, but after several months you may qualify for an unsecured card.
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Tips & Warnings
Have a family member with excellent credit co-sign on your loan. This will put you a step closer to improving your credit history, because the credit bureau will associate your record with the person with excellent credit.
Bankruptcy will drop your credit score 100 points or more, so avoid taking this action if possible.
