How To Pad Your Credit Report If You Have Negative Items

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The majority of people who have a significant amount of credit history tend to have at least one negative item on their credit report.

It is also important to keep in mind that quite a few items that are listed on the credit reports of consumers in the United States like you might not be entirely accurate.

As a result, you are well within your rights to dispute these items and try to get them removed from your credit history if at all possible.

However, you can still improve your credit report even if you think it’s unlikely you can remove negative items from it.

Here are some things you can do to improve your credit report if you have negative items on it. 

1. Start A History of Recent On-Time Payments

As you more than likely know, more recent information affects your credit more than older information does.

Additionally, missed or late payments are one of the most common negative items on a person’s credit report.

You can pad your credit report by establishing a recent history of making your payments on time.

Since your credit score is largely based on the past two years of credit history, starting and continuing a trend of on-time payments can definitely improve your overall credit report. 

2. Get A Credit Builder Loan at a Credit Union

Installment loans are a useful tool if you want to positively impact your credit score.

This is due to the fact that installment loans diversify the types of debt that you build up and pay.

As a result, if you pay installment loans on time, you can actually improve your credit score.

The number of credit accounts you have and the types of credit accounts that you have comprise roughly fifteen percent of your overall FICO score.

Reach out to your local credit union and find out if they offer Credit Builder Loans as one of their financial products. 

Typically, credit builder loans can vary greatly, from a minimum of $500 to a maximum amount of $3,000, and they come with repayment terms up to a maximum of 36 months.

It is important to keep in mind that not all credit unions offer credit builder loans to their members.

You should also know that you will not actually receive the loan proceeds with a credit builder loan and the credit union takes out the loan then freezes the money in an interest-bearing savings account.

Naturally, this account is in your name.

After that, you make your payments, along with interest, until you have completely paid off the loan.

Once you have paid it all off, you receive the money as well as any dividends that have been earned on the initial savings deposit.

You have a very good chance to create a positive credit history if you do make your payments on time. 

3. You Can Get Self Lender Credit Builder Loans

You can also get the exact same sort of credit builder loan online as you could with a credit union if you go with Self Lender.

The process starts with Self Lender putting a loan in a Certificate of Deposit held by the bank in your name.

Doing so does not require a significant amount of money or credit, and you don’t have to put a lot of money upfront, either.

You can start off quite small if you like, with as little as $25 a month being available. 

You first select a monthly amount that you are going to pay into a Certificate of Deposit, also known as a CD.

You figure out the terms of your loan by selecting either a 12-month term or a 24-month term for it.

The loan’s rate is 14.92% annual percentage rate.

The amount of the loan gets deposited into a certificate of deposit bank account which does earn interest and is insured by the FDIC.

It is important to keep in mind that Self Lender will report your on-time payments to all three major credit bureaus in the United States: TransUnion, Experian, and Equifax.

As a result, this can increase your credit score because as previously mentioned, on-time payments of any kind for a sustained period of time will improve your credit score. 

4. Demonstrate A Level of Stability on Credit Reports

One of the main things that creditors want to see is plenty of evidence of stability on your credit report.

If there are any discrepancies about any of your personal information such as your name, current employer, date of birth, Social Security Number, and more, you should make sure to take care of those as quickly as possible.

This is one way that you can pad your credit score. It is likely that this stability will end up improving your credit score in the long run. 

5. Add Your Phone Number to All Credit Applications

Your telephone number could actually be a crucial factor for any sort of credit application.

A creditor might have difficulty verifying your identity without a phone number, and they might not be able to do it at all without a phone number.

A creditor is likely to hesitate to grant credit to someone if they are unable to verify their phone number.

As a result, it is a good idea for you to add your phone number any time you are applying for credit.

This helps creditors verify your identity and feel more comfortable about granting you credit. 

Improve Credit Scores By Using Less Of Your Available Credit Limit

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Credit scores are complicated, and many things as we may think are normal, may actually adversely affect your credit.

For instance, many people don’t realize that there is such a thing as using too much credit.

Sure, you may have lots of credit cards with high limits, however, if you want to maintain a good credit score, you really need to watch your spending.

One method of doing so is by making sure you are always using less credit than is available to you.

With that in mind, here is a closer look at how this works.

Why Keeping Balances Low is Important

Firstly, when it comes to your credit cards, it is important to keep your balances low.

This is especially the case when it comes to revolving credit, which allows you to continuously borrow money up until a certain limit.

While these limits seem to be set in stone, they can often be raised.

This is not only a good way to get into lots of debt, which you may struggle to repay, but it can also adversely affect your credit score.

Therefore, those who are not careful in terms of how much credit they are using can end up with astronomical balances as well as terrible credit. 

How High Credit Utilization Affects Your Credit Score

If you are constantly using most of your available credit, this will become a major problem.

This is especially the case if you are only making minimum payments and cannot really afford to pay your credit cards off in a timely fashion.

This is because the balances of your credit cards are regularly reported to credit card agencies and those who constantly have high credit utilization scores are deemed to be problematic.

Generally speaking, most people will pay credit cards off as quickly as possible, to avoid excess fees and other issues.

When this is not possible, it starts to make it look as though you are living beyond your means and can’t truly afford your lifestyle.

Therefore, you become a credit risk in the eyes of most lenders.

Therefore, people with bad credit looking to improve their credit score should start by lowering their credit utilization scores. 

Tips for Lowering Your Credit Utilization

If you are looking for ways to lower your credit score, there are several ways to go about this.

Some of which are as follows:

  • Request Higher Limits: Although it may seem to be counter-productive, requesting higher credit limits is a great way to reduce your credit utilization scores. This is because this is a way to immediately lower your rate of credit utilization. However, if you are the type that has terrible spending habits, this could be risky. Additionally, there is no guarantee that your credit card company will approve the increase. Applying for increases and making inquiries can also adversely affect your credit score. 
  • Create Balance Alerts: It’s easy to overspend when you aren’t paying attention to your spending. Depending on what your credit situation is, one bad move can result in a skyrocketing credit utilization score. However, by setting balance alerts, you will be notified whenever your credit card limit reaches a certain point. 
  • Make More/Higher Payments: If possible, you should also try to make higher payments or pay your bills more than once a month. For instance, if you are able to make higher payments, this will help you lower your utilization score much faster. On the other hand, if you are able to make smaller payments twice a month, this is a great way to reduce your credit utilization score. 
  • Track Your Statement Closing Date: Another thing you can do to lower your credit utilization is to start tracking your statement closing date. This is because the balance you owe on your statement is what will be reported to the credit bureaus. So, if possible, you want to pay your bill down as much as possible before the statement closing date. 
  • Become an Authorized User: Another way you can lower your credit utilization score is by becoming an authorized user on someone else’s account. If you have a friend or family member who is willing to add you as an authorized user, this can be another way to lower your utilization rates. As long as the credit card you are being added to has low credit utilization rates, you will be able to benefit by being added to their credit card as an authorized user. 

Overall, people with bad credit looking to improve their credit score need to do their very best to reduce their credit utilization rates.

Some methods of doing so are creating balance alerts, requesting higher limits, tracking your statement closing dates, and making sure you pay your credit cards before, which can be very effective ways to reduce your utilization rates.

Moreover, if you have someone in your life with great credit, being added as an authorized user can be an easy way to help you start lowering those rates.

Either way, if you are serious about achieving good credit, focusing on lowering your credit card utilization rates is one of the best things you can do.