Delinquencies are just one reason credit scores fall. Most people do not realize that balances on revolving credit has a huge impact on your scores as well. As a rule of thumb, you ideally want to keep your balances on credit cards, equity lines, etc. below 35%.The first thing you should do when trying to improve your credit score is to obtain a current credit report from all 3 credit bureaus (Equifax, TransUnion, and Experian). This will let you know exactly what is hurting your score the most, and give you a chance to identify anything that is being reported inaccurately. Dispute any errors immediately with each bureau to begin getting your credit back on track.
If you have any errors on your credit report then this is where you want to focus your enegery.
Call the creditors that have reported the error and obtain a status letter about the history of yur account. This might take some effort if this is a collecton agency but well worth the effort.
Once you have the letters stating your status, mail the letters in the credit agencies for an update. The update process will take about 30 days.
When is the last time you requested a credit limit increase? A higher credit limit can increase your score because it reduces the ratio of credit used to maximum balance. A good general rule for optimizing your credit score is to call you credit card companies every six months to request a credit limit increase.
Many credit vendors offer "rapid rescore" type products, which tell you exactly what items to correct and what effect it will have on the credit score. Usually, you can fax the documentation needed and have the score raised within a few days. There is an extra charge for this type of rapid rescore.
If you have zero credit and cannot qualify for a credit card or car loan, nevermind a mortgage, a secured credit card is always a great place to start. Most banks provide secure credit cards. You bring them the amount you wish to open the card with. Some banks may have minumum limit requirements. For a $300 card you would deposit $300 into the secured credit card account, and the bank literally draws off your own money, not taking a risk to their own funds, while still giving people the opportunity to build initial credit. The credit bureaus typically estimate that such a card will generate a positive impact in roughly six months. Then, unsecured cards and other charge cards may be available to continue building credit depth and better scores.
