Late payments, a small gap between your limit and the current balance of your credit card, and disputes with companies that end up with outstanding debts can all affect your credit rating score. If you are planning on getting a loan, or a mortgage, or any kind of credit in your life, it is worth not only knowing what your correct credit rating score is, but also actively working to try and improve it.
It has been speculated that up to 70% of credit reports have errors, which means that a number of these also have inaccurate rating scores. It is possible to obtain free copies of your credit reports from the three nationwide companies in order to check if there are any errors.
If there are inaccuracies in the report about collections, late payments, charge-offs, or debts that aren’t yours, it is definitely worth correcting these mistakes. This can be done by writing to the creditor themselves and asking for a letter proving that an error has been made, and then submitting this to the credit bureau in question. If credit limits are lower than they actually are, say for example, if your credit card has a limit of $5 000, and the balance is sitting at $1 000, these numbers translate to a better credit rating score than if your limit has been inaccurately reported as $1 000. In the second scenario it makes it seem as though your credit card is constantly at it’s maximum, which is not ideal, and lowers your credit rating score.
If there are any items that are over seven years old are on your credit report, they can be removed, as they should have automatically been taken off. If you have at some point been made bankrupt, then individual debts relating to that bankruptcy should be removed or they can lead to a lower score.
There are various other mistakes that you may find when looking at your credit report, such as an incorrect spelling of your name, incorrect address, or an old employer that is listed as your current employer. These won’t directly affect your credit rating score, but are worth correcting.
Clearing up old debt and making sure that you make minimum monthly payments of credit cards, and making payments of debts by the due date every month is the best way of maintaining a high credit rating score.