Discover how to better position yourself for approval before applying for your next loan or credit card.
Your credit report is a detailed record of your credit history that can affect whether lenders will approve you for borrowing, help you access lower interest rates and generally put you in a more favorable position for borrowing. So it’s natural that you’ll want to keep it as strong as possible.
Let our tips help you improve your credit report and overall credit history no matter you’re current financial situation.
What’s on my credit report?
Your credit report lists applications you’ve made for all forms of credit (whether approved or not), your repayment history, details of any defaults you may have, your current debt and information on the accounts you currently hold.
Among the details contained in your credit report are:
- Your personal information. Listed in your report are your full name and date of birth, your Social Security number and your employment information.
- Consumer credit information. This includes any credit applications you’ve made in the last five years, the type of those credit accounts (for example, credit cards, auto loans or mortgages), the account open and close dates, your credit limit or loan amount, the account balance at the time of the report and your payment history.
- Default notes. Your report includes details of any overdue debts you might have, payments you’ve missed on loans and utility bills and other serious credit infringements.
- Information that is public record. Credit bureaus collect information that’s held in the public record, including any bankruptcies, foreclosures, lawsuits, wage attachments, liens and judgments made against you.
How to improve your credit history
Improving your credit score can be a slow process, but it could help you get financed down the road with more flexible options and better borrowing terms.
- Order a copy of your credit report. Request a free credit report from the major bureaus too stay on top of making sure that lenders see only the most accurate picture of your financial health. Confirm that your personal information, employment data, open accounts and balances and other financial details are current and accurate. If you discover any errors, dispute them with the three credit bureaus and the provider that reported them.
- Pay down your credit card accounts. Your overall credit score is determined by many variables, including your credit utilization rate. To indicate to lenders that you’re a responsible borrower, only carry a balance with a utilization of 30% or less. For example, if your credit limit is $1,000, keep your balance below $300, which is 30% of your limit.
- Commit to a budget and timely payments. Take a deep look into your finances to understand how you might be able to lower your debt-to-income ratio and overall debts. If you can successfully continue to make on-time payments, not only will you avoid late fees — but your credit report will also reflect that you can successfully manage your finances.
- Don’t attempt to open new accounts until your score improves. Every time you apply for credit, it’s listed on your credit report and pulls down your score. By waiting, you can take advantage of better interest rates.
- Avoid hastily closing unused accounts. While this sounds like a good strategy in theory, having only newer accounts will result in a lower score. Lenders want to see a long history of credit in your report.
- Track your credit score. Some credit reporting bureaus offer monitoring services that will notify you any time there’s a change in your credit score and information in your report. These services could be helpful in staying top of your overall financial well-being.
Having a clean credit report can reflect to lenders that you’re a trustworthy borrower and can lead to favorable rates and more competitive terms when you apply for credit. Get a copy of your credit report today if you’re not sure of your creditworthiness.
You can use several credit repair strategies to get your report in good shape to gain access to better financial products down the road if you’re currently unhappy with your credit standing.