Essential Steps to Fixing Your Credit Score
If you have bad credit, you know that it can make your life miserable.
You can be denied loans and the ones you do get many times aren't worth even having because the APR is pushed up by lenders to dizzying heights.
This is especially true with unsecured loans.
However, even in the midst of the biggest recession since World War II, it's still important that you repair your credit as soon as you can.
One reason is that it can take years for your credit to fully recover, so you need to start today if you plan on buying a house or car in the not too distant future.
The steps you take today will also allow you to get better rates on cheap homes, property, and other assets that will be cheaper than they were just a few years ago once the market bottoms.
Here some of the steps that you need to get started today.
Get Your Credit Score from the Three Major Credit Agencies Your first step is to get a credit report from all the major credit agencies.
These agencies are Transunion, Experian, and Equifax.
You need to get all three because the information that's available in your report varies from company to company as some lenders will report your score to one and not others.
Make sure that your report doesn't contain any mistakes.
If you find any, contact whoever put them on your report and attempt to get them fixed as soon as possible.
Another thing to look for in your credit report is accounts that are past due, especially if they're in collection.
If your accounts are in collection, you may be able to negotiate your debt with your creditors so that you pay a fraction or less of the debt.
However, the fact that you negotiated the debt will still show up on your credit report, so make sure that you are unable to pay back the full amount before you take this step.
Negotiation works particularly well if you can give your creditors a lump sum payment.
Pay Off Your Credit Cards One of the most important aspects in improving your credit is paying down your credit cards.
While you need to use credit to build up your credit score, using too high of a percentage of your credit limit negatively impacts your credit score.
Up to thirty percent of your score is the amount of revolving credit in use, so if you have your credit cards almost maxed out your credit score can possibly go down by a few hundred points.
Another option, but also a dangerous one if you can't control your spending, is to attempt to work up your limits.
This way, a smaller percentage of your credit limit is in use.
It's very important if you take this step that you don't keep charging on your cards though.
Use a Rescoring Service Rescoring services may be able to help you better your credit quickly if you're looking to get a loan soon.
They bypass the red tape in the system by reporting mistakes on your credit report directly to the rescorer, the agency that acts between your credit card company and the credit reporting agencies.
If you report mistakes yourself, you have to report them to the bank, which then reports to the rescorer, who then reports to the credit reporting agency.
These companies can be found online, but may not be worth the money if you're not looking to get a loan very soon.
Pay Your Bills On Time Another important step to improving your credit is to pay your bills on time.
Late payments can stay on your credit report for a year or more, so make sure to start making your payments on time starting this month.
The longer you wait, the longer it will take you to improve your credit score.
If you follow these simple steps, you'll be on the way to improving your credit score today.
One more important thing to note is to look for the reasons you had bad credit to begin with.
Were you budgeting your money bad or was it a one-time emergency? Do your best to attempt to live within your means and save a few dollars every payday for future emergencies.
If you do this, you'll never have to worry about bad credit again.
You can be denied loans and the ones you do get many times aren't worth even having because the APR is pushed up by lenders to dizzying heights.
This is especially true with unsecured loans.
However, even in the midst of the biggest recession since World War II, it's still important that you repair your credit as soon as you can.
One reason is that it can take years for your credit to fully recover, so you need to start today if you plan on buying a house or car in the not too distant future.
The steps you take today will also allow you to get better rates on cheap homes, property, and other assets that will be cheaper than they were just a few years ago once the market bottoms.
Here some of the steps that you need to get started today.
Get Your Credit Score from the Three Major Credit Agencies Your first step is to get a credit report from all the major credit agencies.
These agencies are Transunion, Experian, and Equifax.
You need to get all three because the information that's available in your report varies from company to company as some lenders will report your score to one and not others.
Make sure that your report doesn't contain any mistakes.
If you find any, contact whoever put them on your report and attempt to get them fixed as soon as possible.
Another thing to look for in your credit report is accounts that are past due, especially if they're in collection.
If your accounts are in collection, you may be able to negotiate your debt with your creditors so that you pay a fraction or less of the debt.
However, the fact that you negotiated the debt will still show up on your credit report, so make sure that you are unable to pay back the full amount before you take this step.
Negotiation works particularly well if you can give your creditors a lump sum payment.
Pay Off Your Credit Cards One of the most important aspects in improving your credit is paying down your credit cards.
While you need to use credit to build up your credit score, using too high of a percentage of your credit limit negatively impacts your credit score.
Up to thirty percent of your score is the amount of revolving credit in use, so if you have your credit cards almost maxed out your credit score can possibly go down by a few hundred points.
Another option, but also a dangerous one if you can't control your spending, is to attempt to work up your limits.
This way, a smaller percentage of your credit limit is in use.
It's very important if you take this step that you don't keep charging on your cards though.
Use a Rescoring Service Rescoring services may be able to help you better your credit quickly if you're looking to get a loan soon.
They bypass the red tape in the system by reporting mistakes on your credit report directly to the rescorer, the agency that acts between your credit card company and the credit reporting agencies.
If you report mistakes yourself, you have to report them to the bank, which then reports to the rescorer, who then reports to the credit reporting agency.
These companies can be found online, but may not be worth the money if you're not looking to get a loan very soon.
Pay Your Bills On Time Another important step to improving your credit is to pay your bills on time.
Late payments can stay on your credit report for a year or more, so make sure to start making your payments on time starting this month.
The longer you wait, the longer it will take you to improve your credit score.
If you follow these simple steps, you'll be on the way to improving your credit score today.
One more important thing to note is to look for the reasons you had bad credit to begin with.
Were you budgeting your money bad or was it a one-time emergency? Do your best to attempt to live within your means and save a few dollars every payday for future emergencies.
If you do this, you'll never have to worry about bad credit again.
