Forex Articles

You just pulled your credit score and found it strangely low. That's not good.

But it happens, and sometimes for reasons outside of your control. You didn't know you were going to lose your job, get sick or experience some other unexpected event that racked up the debt or made you miss payments. Luckily, that's all behind you now; you're in a better financial place (congratulations). But now you're living with damaged credit that you need to use in the not-so-distant future.

In some cases, the cliché time heals all wounds definitely applies. But in others, there are ways to improve your score quickly. Here are some things you can do. (For a refresher on What Is A Good Credit Score?, click here first.)

Is a delinquent credit card account casting a serious dark cloud on your credit report? Call the company and offer to pay the credit card balance in full if it will remove the "past due" part from your report and replace it with paid as agreed. It may balk at first, but most companies would rather have the money than have to turn things over to a collection agency. If the company does agree, get it in writing before paying the bill.

Keep in mind that if this debt gets to a collection agency, your chances of getting the record erased is pretty slim unless there is a legitimate reason (i.e., dispute) about the delinquency to begin with.

If you want your credit score to improve, you should close a bunch of accounts so it doesn't look like you're one big ball of debt, right? Negative! Part of your score is based on how much of your available credit you're using; this is called your credit utilization ratio, the percentage of your total credit limit that you're using right now. A high credit utilization ratio (meaning, you've tapped into a lot of your available credit) can lower your score, while a low credit utilization ratio can raise your score. So, if you close an account, you've eliminated one of your lines of credit, and your percentage moves higher. Instead, keep your accounts, but pay down those balances.

Does the report indicate that your plastic is over its credit line? Why the heck would a company allow you to charge so much more? It probably isn't; the company may well have upped your limit, but forgotten to share that news with the credit bureaus. That miscommunication lowers your credit score. So call the company and tell it to make sure the bureaus have your current limits. And while you're at it, ask your creditors to give you a higher credit limit if you've had a good track record of on-time payments. A higher credit limit lowers your credit utilization ratio. That will raise your score at least slightly.

It's not like there's somebody sitting at a desk calling everybody you do business with and asking for a daily update. Your credit reports are compiled automatically. So, dispute any incorrect charges you see right away. Online forms to do so are available at each of the big three bureaus: Experian, TransUnion and Equifax.

If mistakes are putting a big purchase, such as a mortgage, at risk, let your potential lender know, too. Some lenders offer a service called rapid rescoring. They can submit proof of the error to the credit bureaus and have it repaired in a few days instead of the typical month (or more). Bear in mind that rapid rescoring only works if there is an actual error or something you can fix quickly, such as paying down a credit card balance, for example.

Everybody knows about identity theft. If your credit report looks really, really bad and you've acted really, really good with your money, there's likely an identity problem. If could be an identity theft issue, or the credit bureau may have you confused with somebody else (one typo with a Social Security number, and a stranger's financial sins might be posted to your report). Check all of your identifying information before doing anything else.

The best way to improve your credit score rapidly is to make sure there are no errors on your report, pay down your debt and keep any accounts open. (For more thoughts, see Best Ways To Repair Your Credit Score.) Any service that offers to repair damaged credit super-fast is something to avoid. If legitimate problems on your report – a bankruptcy or accounts going into collection, for example – are bringing down the score, there's little you can do but prove over time that you're no longer a risk.