People have less than perfect credit for any number of reasons. Bad credit may be the result of circumstances beyond the individual’s control. For example, a divorce will often cause the credit ratings of both parties to decline. Medical bills and other financial issues may force an individual into bankruptcy. Regardless of the reason for bad credit, you can start today to turn your credit rating around. While there are no true “fast fixes” for repairing a bad credit rating, there are a few tasks you can perform that will net you an instant credit rating improvement.
Errors on Credit Reports
Credit bureaus diligently attempt to record accurate and timely information about each individual with a credit history. However, errors and mistakes do appear on credit reports. Errors will remain on the report until they are disputed or they expire after seven years. Errors can cause your credit score to be several points lower than it should be.
The way to guard against errors on your credit reports is to obtain credit reports from each of the three credit agencies at least once per year. Examine the date that is recorded about your credit history. If you find an entry that you do not recognize, or one that has an amount that is in error, file a dispute with the credit bureau to have the error removed.
The credit agency contacts the reporting company. The reporting company has 30 days to validate the entry. If the entry is not validated before the deadline, the entry is deleted. Many times, the removal of an error will increase the FICO score several points.
Credit Repair Companies
In severe cases, where your credit issues are beyond what you can clean up on your own, it may be in your best interest to look into a credit repair company. These specialists are trained to deal with creditors directly, as well as the credit bureaus, and they have access and resources that you do not. This gives them an advantage in trying to remove old accounts which should no longer be on your credit reports, and help negotiate past due loans and other debt issues which are ruining your credit rating. Again, this is not a quick fix, but using a credit repair company will nearly always produce positive results over time, and get your credit back on the right track. There are several online credit repair organizations, including:
Collections and Open Accounts
Another task you can perform to garner instant improvement in your credit rating is to resolve any outstanding debts with collection agencies. Pay open accounts down or completely off, if possible. The more accounts you can resolve to reflect that you are current with the payments or that the account has been paid in full, the more your credit score will improve.
No Quick Fix
For most people, improving their credit rating simply takes time. Individuals must first develop healthy financial habits, such as paying bills on time and maintaining available balances on credit cards. The longer you practice sound financial habits, the better your credit rating will be.
Things You Can Do To Fix Your Credit
While you continue to pay your bills on time and avoid running up additional credit card charges, you can do a few more things that will raise your credit score.
1.) Don’t apply for additional credit.
Every time you apply for a new credit account, your credit history is queried. Your credit score is lowered with frequent inquiries. Only apply for credit accounts after you have given the account serious thought and made a conscious decision to responsibly open the account.
2.) Always maintain about 1/2 of your credit card balances as available.
One of the factors that will lower your credit score is maxed-out credit cards. Make sure that you use 50 percent or less of your available balance at any given time.
3.) Pay off your credit cards.
Many Americans carry two or more credit cards. If you carry more than one credit card, you are probably paying a substantial amount of interest each month just to maintain your credit card accounts. Start paying off your credit cards by paying more than the minimum each month on the card with the lowest balance. After this first card is paid off, start on the one with the next largest balance. Continue until you pay off your credit cards.