These easy credit repair tips can help you repair bad credit and restore your creditworthiness. It is very important to keep in mind that bad credit is not impossible to overcome. As long as you are willing to face your credit problems squarely and are determined to resolve the problem, you can find a way out of your predicament.
Always request for your free credit report
This first tip is something that most people neglect; as a result, they are not aware of what negative information their credit report contains until they are denied credit or are turned down for insurance. At worst, a bad entry on your credit score can even cost you a job. Availing of your free credit reports is not difficult since you can request them online through the Annual Credit Report site. However, if you are working to improve your credit score, you might want to check your credit reports more often, although you will have to pay a nominal amount for additional reports.
Set up credit reminders so you won’t forget to pay your bills
One of the most common reasons why credit scores go down is late payments. Buy a datebook and list reminders of when payments are due. You can also consider setting up auto payments that will automatically debit credit card or loan payments from your bank account, although these will only debit the minimum payments. If possible, you should pay your bills before the payment date. Early payments can not only help you avoid late fees but also boost your credit score.
Take care of late payments within thirty days
While late payments can reduce your credit score, you can still repair the damage by making your accounts current within thirty to sixty days. Keep in mind that accounts that are ninety days overdue can damage your credit score for two years.
If you have bad credit
You can repair it by applying for secured credit cards that will help you rebuild your credit history. These cards are used like regular credit cards but require you to place money into an account to act as collateral. The amount you deposit will also be your credit limit.
Reduce your outstanding debt
The less outstanding debt you have, the better your credit score will be. Make a list of your existing open accounts and focus on increasing payments to those loans that have higher interest rates. You should also stop using your credit cards to ensure that your unsecured loans don’t get any bigger.
Monitor your credit utilization ratio
This ratio measures the amount of debt that you owe compared with your total credit limit. You should avoid having a credit utilization ratio that is bigger than 25%, particularly on credit cards that charge higher interest rates. However, one strategy you should not pursue to reduce your credit utilization is to open new accounts. This can adversely affect your credit score in the long run. But one thing you can do is to request for an increase in your credit limit while keeping your debt balances low. This will help reduce your utilization ratio while still helping to improve your score by showing that you can manage your credit responsibly.
Dispute errors on your credit report
This is one of the best credit repair tips that you can have. Even if you have a good credit history, it can still be marred by errors that appear on the report due to misreporting by the credit bureaus. You can dispute errors by filling up a form provided with credit reports for this purpose, or you can write a letter to the credit bureau directly. But you should make sure that your dispute is supported by the proper documentation. Once the credit bureau receives your dispute, it has thirty days to investigate your claims. If they find an error, they are required to report it to you and provide you with a new credit report that contains the corrected entry.