Raising Credit Score - How the System Works by Bevolyn Nelson

Credit plays such a big role in managing the finances of families and individuals that many books have been devoted to the subject of raising credit score. Because of this central role of credit buying and financing, a good credit rating is a major asset to the modern family or individual. On the other hand a low credit score is something to be avoided like the plague since a low score not only affects your present buying position but also impacts your future credit worthiness. Credit score even affects the price you pay for services now such as auto insurance and others. So what are some of the causes of a low credit score to be avoided?
Causes of low credit score
1. Spending in excess of your income will certainly put a strain on your ability to meet credit obligations and creditors will see this as a red flag warning of a high risk. This can hinder your getting that loan approved.
2. Sometimes adversity befalls us in life resulting in an unusual drain on our finances. Such things as major medical expenses, prolonged unemployment and other setbacks may cast a dark cloud over your credit situation.
3. Failing to make installment payments at the agreed time and in the agreed amount can also lower your credit score. But even if your score has taken a dive rest assured that recovery is possible and you can raise your credit to a high rating once again. But how can you improve your credit score?
Improving credit score
Raising credit score can take a little time but is well worth the effort. Here are some suggestions: 1. Get a copy of your credit report from each of the three major credit bureaus. Examine each closely to spot any errors such as any creditors listed that you do not recognize? Any accounts which you have paid off but which still appear as unpaid etc.
2. Report all errors to the credit bureau in question and request that a correction be made. In the U.S. they have 30 days in which to verify the debt as valid or else they must remove it from your report.
3. Compile a budget showing all your expenditures for the month. Also show all your income from all sources. Then calculate the totals and note whether your income is adequate for your expenses. Also identify debts that have adversely affected your credit score and consider ways to pay off these problem debts.
4. Contact your creditors and enlist their aid in paying off these debts as quickly as possible. In certain cases your creditor may be willing to lower the interest on your loan to help in liquidating the balance.
5. Credit counseling services can sometimes provide effective aid in negotiating with creditors, lowering interest rates in some cases and lowering payments to a more manageable amount.
6. Once an arrangement has been setup with your creditors, be determined to adhere to it. This will help in your restoring your good credit rating.
7. Maintain good communication with your creditors especially when you are experiencing financial difficulty. If you anticipate missing a payment work this out beforehand with the creditor and avoid adversely affecting your credit score.
While recognizing the major role played by credit in the complex world economy, it is the course of wisdom to manage well your asset of a good credit score and you can raise this important score by following the suggestions discussed in the comments above.