Having a low credit score isn’t as unheard of nowadays as it used to be. With the economy just beginning to come back and the number of unemployed Americans slowly declining, many people are finding themselves stuck with bad credit. That’s a hard predicament, since credit scores are used to determine several types of loans including home loans. Fixing your credit score is an important project.
What attributes to bad credit? Late payments are the worst, and one late payment can drop a credit score by up to 35%! Charged off credit cards and too many credit inquiries can also bring your credit score down. Luckily, credit scores are ever changing and can be improved. By following these six steps, over time you will fix your credit score.
Secured credit cards are a simple way to slowly increase your credit score. When you open a secured card, you give the lender a deposit and the lender gives you credit. Usually, your deposit amount and credit amount are the same. Over time, this positive, revolving credit will increase your credit score and prove to lenders that you are responsible.
Making Payments On-time
If you want good credit, you have to make your loan payments on-time. Late payments account for one-third of your credit score. Before getting a new car or taking a personal loan, ask yourself if you can truly afford to make the payments. If there’s any doubt, it’s best to wait. If you have to make a late payment, be sure to call your creditor. Usually, you’ll have a 10-day grace period during which you can make your payment without consequence.
Catching Up On Late Payments
It’s never too late to catch up on your account and bring it into good standing, even if you have a history of late payments. Some creditors will set up a 3 – 6 month payment plan that can help bring your account current.
Paying Off High Account Balances
Having one or more pay-offs on your credit report can increase your credit score. It’s a great way to show lenders that you pay-off your loans. However, some accounts require more digging before pay-off. Call us if you have concerns about a closed account you’re considering paying off.
Disputing Wrong Information
Credit reports are not fail-safe. There have been occasions where creditors provide incorrect, negative information to the credit bureau which in turn, reflects badly on your credit.
You can easily dispute these wrong accounts. Directly from the Federal Trade Commission’s website: “Send your letter by certified mail, “return receipt requested,” so you can document what the credit reporting company received. Keep copies of your dispute letter and enclosures. Credit reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous.”
Keep Track of Your Credit
Keeping track of what’s on your credit report is essential to building good credit. By checking your credit reports monthly and doing an annual review, you’re ensure all information is correct. If you’re following these steps you’ll see the increase in your credit score and know that all of your hard work is making a difference!
For more information on how you can fix your credit, give us a call or send us an email!