A good credit score can come with many perks that any person could benefit from. Things like lower interest rates and better deals for whatever purpose you choose: a mortgage, procuring a credit card, getting car loans, or even for a business loan.
But credit scores are not usually on the top of our priority lists, not when we don’t need it yet. That’s why credit repair can be a pain, cause we never think of it until absolutely necessary. Don’t fret though, repairing bad credit isn’t as daunting as it seems. There are some measures you can take to get a better credit score.
Steps to Fix A Bad Credit
You can read and follow the following steps to repair your bad credit score:
1) Look through your credit report
First and foremost, you need to know what your credit actually looks like to figure out what you need to do. Find out what does the most damage to your credit score, so you can take the initiative to remedy it, as well as possibly avoid it in the future.
A way to do this is through credit bureaus (Equifax, Experian, TransUnion) or through free credit report services like Credit Karma, Credit Sesame, and Quizzle. For credit bureaus, simply ask for your report; with free services, you just need to sign up to view your report.
2) Always pay your outstanding balance
The best method of reviving your credit is to resolve all your outstanding balances. Any pending amount, especially long-standing ones, does not reflect well on your credit. This is not easy to do, especially with loans, but it is the best way to ensure you have good credit.
This step is more of a long-term plan than a short-term solution. Set aside whatever amount you can, skimp where you can, so you can have something to pay down your balance with. Clearing balances will help in increasing your score, plus you’ll have less interest to deal with overtime.
3) Beware of report errors
People make mistakes, and sometimes, it’s you who ends up paying for it. For instance, an errant insurance claim may appear on your record, stating that you haven’t paid your dues. Should you fail to rectify it, it ends up reflecting as a negative mark on your credit history.
Services are available to make disputing these false reports easier. Credit bureaus take longer than online services like Credit Karma, but both will achieve the same results in helping you dispute the claims.
Take as much time as you need when looking through your credit history. Make sure you review your credit reports to catch any mistakes in it before it becomes too late to fix.
4) Avoid late payments
Late payments reflect negatively on your credit score. This shows the failure of management and commitment on your part and is generally off-putting to lenders when applying for financial assistance (business loans, mortgage, student loans). They’ll think you are unreliable and will be more likely to flake out on payments, which in turn will hurt your chances of approval.
Avoid paying later than the required date, but if you’re in a pinch, choose the bills that don’t show up on reports. Lenders and credit card providers are more likely to report late payments, as opposed to utilities. Doublecheck your credit report to see which of your bills have been reported in the past.
5) Dispute false lateness claims
False claims of late payments are just as likely to negatively affect your credit score. Be sure to stay on top of your credit report to see whether the late entries are accurate.
In case you find any errors, dispute the claim as soon as you can. This can be done through credit bureaus or other online services.
6) Increase credit limits
Another factor considered in credit scores is how a credit card is used. Having a balance that is more than half the credit limit reflects negatively on the score, and maxing out credit cards will definitely hurt you.
The negative effects of going over 50 percent of your limit can be fixed by simply paying the balances. Another way to get past this is by increasing your credit limit. Having a $2500 debt on a $7000 card reflects better than having the same debt on a $5000 card.
Contact your account holders and request a limit increase. Their approval will be reliant on your purchasing and payment history; if you have a good track record, you’ve got nothing to worry about.
Only do this if you’re certain you won’t abuse the freedom of a higher credit limit, or else this plan will backfire. Stick to your original expenses and avoid reaching half of your new limit.
7) Open a new account
Opening a new credit account has the same effect as increasing your credit limit: it gives you a better credit ratio. As long as you don’t build up a balance on your new card, your credit score will benefit from this.
Don’t forget that this new card is just for show. It only serves as a boost for your credit score, not as motivation for you to spend more.
8) Keep your older accounts
The age of your credit history is also relevant to credit scores. Closing a one-year-old account is better than closing a ten-year-old one; it doesn’t affect your credit score as much. So if you ever need to trim down the number of your active accounts, it is better to close “younger” ones.
9) Piggybacking off good credits
If you have a friend, family, or partner who has a stellar credit history, they might be your ticket to a better score. Ask them to add you as an authorized user; your credit history will automatically look better.
But be careful because this method is a double-edged sword. Any negative marks that they make will also reflect on your history. Make sure you choose someone that you can trust with your life.
10) Make some calls
People underestimate the power of good customer service. If you’ve accidentally made late payments or tried disputing false claims with no luck, try calling your creditors. They can contact credit bureaus to have certain entries removed from your report.
Note that this works best if you have a long-standing, positive relationship with the creditor. If you already have a bad track record, this won’t do you much help. That said, being nice can get you a long way, so what’s the harm in trying?
Still, having trouble with raising your credit score? Clear Skies Capital can help with that. When it comes to credit repair, time is essential; the quicker you act, the sooner it becomes better. Contact Clear Skies Capital, you can rest easy with the help of our finance experts.