A credit score is a three-digit number that can impact your life in many ways. A good credit score means you qualify for a mortgage, lower interest rates, and other better terms on a credit card or loan. Fixing your credit will make you seem appealing to the lenders.
There are several ways you can use to improve your credit, but the best time to start is now. Don’t be among the many many that think about credit when it matters. It is impossible to fix it overnight.
The best time to learn and improve your credit is now so that the next time you need approval for a credit card or loan, your score will be around 700.
It isn’t all about improving your credit score. What many millions of Americans don’t know is that credit systems aren’t close to perfect. They can make you seem riskier than you are. You may need to fix something that might be incorrect.
In this guide, you will learn all the steps and options you have to fix your credit. You will learn how to remove errors from your credit report and how to improve your credit score. Below are the five steps to repairing a bad credit:
1. Get your credit report
Fixing the errors and omissions that might be in your credit report is the first step. You can identify these errors by viewing your credit reports often to make sure there are no fraudulent activities, and all entries are accurate.
Your report will let you know what exactly you need to fix. Getting your credit report shouldn’t cost you anything. The law requires the three major credit bureaus to be giving you one free credit report every year.
You can request your credit report by either via phone at 1-877-322-8228 or send a mail to the Annual Credit Report Request Service.
Once you get your credit report, check your credit history, credit cards, accounts, and loans that were sent to legal actions like bankruptcies and foreclosure and collection agencies by your lenders.
Every year, you get three free credit reports. If you need an additional copy, you can purchase it from the credit bureaus. A single copy costs between $1 to $11.
2. Check the credit report for errors
When you receive your credit report, always review it to identify possible errors. 25% of credit reports contain errors that result in denials on credit applications.
Responsibly managing your credit helps improve your score. To fix bad credit, you should focus on the source. Look for the following when reviewing your credit:
- Incorrect personal information
- Missing accounts
- Unknown accounts
- Incorrect public records
- Duplicate accounts
- Fraudulent activities
- Data management errors
- Incorrect inquiries
- Open accounts that should be closed
- Accounts listed as closed by lenders
These errors impact your credit score. If an error appears in two or more reports from major credit bureaus, take an active approach to fix them. Many people see a dramatic improvement in their credit score after fixing such errors.
3. Dispute the errors in your report
Major bureaus are obligated by the law to try and resolve mistakes. Mail or call them to request for a correction. You should report the errors to the bureau that gave you the report. You will need to prove your identity and provide documentation to prove the errors are false.
You should also inform the creditor or lender that submitted your account to the credit bureau about your dispute and the inaccuracy. When creditors or lenders can error on their side to update your credit report in all the major credit bureaus.
4. Pay overdue balances
Credit bureaus consider all payments that are past 30 days past due as late. The longer you take to clear your balances after the due dates, the more it impacts your creditworthiness and score. Remember, late payments will affect your score for up to seven years.
5. Increase your credit limits
Credit limit refers to the maximum amount you can have in your credit card at a given time. Your credit limit depends on your creditworthiness and your credit card. You can request your creditors to increase your limits – upon approval of your request – your credit score improves. Remember, no creditor will increase your credit limits if you don’t pay back on time.