Fixing your credit can be similar to working to lose weight. It requires time and perseverance. There is no quick fix for having bad credit. Effective credit repair allows you to access lower interest rates and better credit terms when borrowing for personal expenses or to grow your business. In this post, I’ll share tips on how to fix your credit.
How to Fix Your Credit
Understand Your Credit Score
The first thing you need to find out is your credit score. This way, you will know where you’re starting at. There are tons of places to find your credit score. This article features a few of them.
Review Your Credit Report
Your credit score is gathered from your credit report. It plays a significant role in your credit fix. You can request a free copy if you don’t have a copy of your report.
Your credit report contains data used to compute your credit score, and just like most reports, it can contain errors. You need to review every aspect to ensure everything is correct.
Ensure that all of your payments were correctly entered for your accounts. If you find any errors on the report, you can dispute them at one of the three credit bureaus.
Contest Negative Marks
If you discover any errors on your report, you need to dispute them with one of the credit bureaus. To maximize your dispute efforts, pay close attention to those factors that weigh heavily on your credit score.
Start with derogatory marks as they weigh higher on your score. Check collection accounts and judgments. Issues of the same collection account appearing more than once are uncommon.
If that does happen, you can dispute it to the credit bureau. However, bear in mind that some dispute takes longer than others. After initiating the dispute, the bureau will investigate and pass the final resolution.
Maximize Credit Limits
Another way to fix your credit is to raise the spending limit of your credit card. The available credit ratio on your card can make a difference in your score. A balance above fifty percent of your credit limit can hurt your score, and maxing out your card’s limit will worsen your credit score. You can swiftly contact your credit card company and ask them to increase your card’s limit.
If you have a good credit history, most credit card companies would happily increase your limit, as that would bring them more money. Otherwise, you can pay down your balances to get your ratio increased.
Negotiate With Your Creditors
Sometimes you can run into circumstances that stop you from paying your credit card bill; you can’t deny that fact, but you can plead with your creditors to erase those accounts that went to collection.
Write to your creditors, offering to pay the remaining balances if they will report the account as “paid as agreed” or even remove it altogether. Ensure you get the creditor to agree in writing before proceeding with the payment.
You can also write to them emphasizing your previous good payment history and ask for the accounts to be removed.
Create A Budget And Stick To It
This plays a significant role in ensuring we avoid repeating unreasonable mistakes. If you do not keep track of your income and expenses, adjusting your credit score will not help if you have to spend it again. You need to set sound financial goals and budgets. Make a postal budget; you will need this set aside when you send your credit cards.
Keep the Contact Details Of The Credit Bureau Rep
The top three credit bureaus usually receive multiple emails from consumers. Saving the email addresses of the representative you contact at the credit bureau will be an essential part of your credit repair journey. This is handy when you must file a dispute concerning credit reports that are not in your favor. I recommend saving every email and periodically contacting the representative if they don’t give you an answer in ample time.
Check Your Accounts Regularly
Identity theft can ruin your credit. Make it a practice to check your accounts regularly. You can also set up a debt monitoring service account to view your reports.
Debt settlement will not happen overnight. Anyone who says that is likely to stretch the truth. However, after six months, you will see some improvement if you have a good record of payments.
Become An Authorized User
Try as much as possible to avoid getting credit all by yourself if your score is already bad. The interest would be through the roof. You can become an authorized user on a family member’s account. This will not only help you increase your credit score but will also help you to increase your income on time as well. Make sure that you use the card responsibly. If you don’t, this could ruin your integrity and tarnish your image if you do not stick to the agreed terms.
Hire A Professional Service To Assist You
To save you the stress and frustration that comes with improving your credit score, you need the services of professionals. They can help improve your credit score from 100 points to 500 points at a time. It is recommended that when hiring a professional, you should seek in-depth experience.
Improving your credit report isn’t so hard. You need the correct information to know how to go about it. If you can’t, then it’s best you employ the services of a law firm to dispute your credit report.
Pay Bills on Time
Paying bills on time is fundamental to maintaining a healthy financial life. It’s not just about avoiding late fees; timely payments can positively impact your credit score. Creditors and lenders often look at your payment history when determining your creditworthiness. By consistently paying your bills on time, you demonstrate financial responsibility, which can lead to better credit terms in the future.
It’s essential to have a system in place for managing your bills. Whether you set reminders on your phone, use a bill-tracking app, or automate your payments, find a method that works for you. Staying organized can help ensure you never miss a payment deadline, keeping your financial health and stress levels in check.
Reduce Credit Card Balances
Reducing credit card balances is a critical strategy in managing personal finances. High balances can increase interest charges and potentially damage your credit score. It’s important to understand that maintaining low balances is about spending less and managing your finances wisely. Regularly reviewing your credit card statements and making more than the minimum payment can help reduce your balances over time.
Creating a budget can be an effective tool in reducing your credit card balances. By tracking your income and expenses, you can identify areas where you can cut back and allocate more funds toward paying off your credit card debt.
Pay Off Debt
Paying off debt is a significant step toward financial stability. It’s not just about liberating your income from monthly repayments but also enhancing your credit score and paving the way for future financial opportunities. A strategic approach is vital in this process, prioritizing high-interest debts while maintaining minimum payments on other obligations to evade penalties.
Paying off debt empowers individuals to regain financial control, relieving the burden, allowing for savings, and pursuing essential goals. It brings relief, empowerment, and a path toward financial freedom.
Set Up Payment Reminders
Setting up payment reminders serves as a practical tool for managing financial obligations. These reminders can help ensure timely payments, avoiding late fees and potential negative impacts on your credit score. With digital tools, these reminders can be easily set up on smartphones or computers.
Payment reminders serve as a prompt for due dates and provide a clear overview of upcoming financial commitments. This level of organization can help plan monthly expenditures and ensure sufficient funds are available for each payment. This leads to a more controlled economic life, reducing stress and enhancing financial stability.
Diversify Credit Types
Diversifying credit types can be a beneficial strategy for enhancing one’s credit profile. A mix of credit types, such as credit cards, retail accounts, installment loans, and mortgage loans, can show lenders that you can handle various types of credit. This diversity can positively influence your credit score, reflecting your ability to manage different financial responsibilities.
While diversifying credit types can be advantageous, it’s essential not to take on more credit than one can handle. The goal is to show responsible credit management, not to increase financial burden. Therefore, only take on new credit when necessary and ensure that any new credit taken on can be managed effectively. This approach can lead to a healthier credit profile and better financial opportunities in the future.
Jason Butler is the owner of My Money Chronicles, a website where he discusses personal finance, side hustles, travel, and more. Jason is from Atlanta, Georgia. He graduated from Savannah State University with his BA in Marketing. Jason has been featured in Forbes, Discover, and Investopedia.