For most people, managing credit scores is an issue that is left on the back burner. In fact, most people never experience credit concerns until they have been notified there is a problem or they have suffered a drop in credit rating. People in this category often have a more difficult time with credit recovery that those who have recently exited bankruptcy, but there are a few quick fixes to get started.
Check Your Report
People neglect checking their credit reports and often allow inaccuracies to go unnoticed. Inaccurate information on a credit report is more common than you might think, and can be detrimental to a credit score. It is important to monitor your report often and find out what information is being reported. Look for problems in accounts that may report late payments or have incorrect account balances. Verify debts and request to have creditors update the information or file a claim of misinformation with the credit bureau.
Balance The Ratio
Credit scores are determined using a fairly complex equation, which takes into account several aspects. One of the easiest to identify, and change, is the debt-to-limit ratio. Generally, having a balance higher than 70 percent of the total spending limit on an account is going to bring a score down. The ideal balance is around 40 percent of the spending limit, but a greater improvement in scores is seen when the ratio drops below 30 percent.
Keep Accounts Open
Most people assume that closing accounts after they are paid off is the best approach to managing credit. Actually, having accounts paid off and open is the best way to boost credit. When balances are paid off and remain open, it demonstrates your ability as a responsible borrower with a long standing credit history. Prioritize at least one account to pay off and leave open for six months or more months while you focus on reducing other accounts.