Once your credit score falls, it can feel a bit disheartening and many people do not know where to start to fix it. Begin the process by getting your scores from a reputable website, such as freecreditreport. Once you have a starting point it will be easier to make the necessary plans to fix your score. There are several factors to consider and it is important that you take a diverse approach. Once you get started, as long as you continue your efforts and prevent any other negative marks, your score will start to gradually rise.
Check for Identity Theft
This is not something everyone thinks about, but with the company breaches you often see on the news, it is important to be mindful of it. Exploring your score is the easiest way to do this. If you notice anything odd that you know was never an account you had, you want to dispute it and check the overall security of your personal information. It is a good idea to make this type of check a regular habit that you do about twice a year so that you can catch identity theft quickly should it happen.
Get Your Credit Report
You want to get your score and your full report to start the progress. Knowing your score gives you a place to start and it makes it a bit easier to create some goals. Having your full report makes it possible for you to see exactly what you need to take care of. When you get your free credit report, you will also be able to see where there might be errors on your report. You can contest these and as long as they are truly errors, they will be removed. This can give you a little boost from the start.
When it comes to errors, you simply open a dispute with the credit bureaus. With the items that are not errors, make note of them. Write down the amount and the account holder, as well as the holder’s contact information. You want to start paying off those negative accounts so that they can be removed from your account.
Get Rid of Old Past Due Accounts
This is one of the biggest factors when it comes to your credit score. Any negative account on your report can cause a significant drop in your score. When you are reviewing your reports from all three bureaus, take note of the debts that you never finished paying. If the amounts are smaller, you can often call and take care of them with a single payment.
Those that are larger might take a little more time, but most creditors are willing to create a payment plan for this. If you have larger debts that you are able to take care of with a single payment, some companies will give you a discount, so you save money and get rid of the debt. Do not be afraid to try and negotiate. The worst the company can say is “no” and then you can just get on a payment plan.
Avoid Future Late Payments
When you are working to improve your score, it is imperative that you avoid damaging it further and this means making sure that you are not making late payments or not paying things completely. You can set payment reminders so that you can easily remember when something is due. Use your phone or a calendar for this. What is important is that the avenue you choose for your reminders is one that you see every day so that you do not miss your reminders.
You might also consider having payments debited automatically. You can still use reminders for this so that you can ensure that you have the money needed in the account. It is a good idea to use automatic payments around the time that you get paid. This just makes it easier to ensure that you will have the money in your account.
Use Multiple Credit Types
To improve your credit, you need to have some credit. Consider a secured credit card if you do not have one. While these generally require a deposit ranging from $50.00 to $200.00, they operate just like a regular credit card after this aspect. They report to the credit bureaus and you can boost your score with them.
In addition to a card, other types of credit are also important, such as having a mortgage or an auto loan. Look for installment credit options that you could use. You do not want to just take out credit accounts to boost your score. Make sure that the accounts are necessary because this makes it much easier to keep up with them.
Keep an Eye on Your Credit Card Balances
One of the easiest ways to boost your score is to make sure that you are not maxing out your credit cards and only making the minimum payments. It is often recommended that your credit utilization is no higher than 30 percent. Of course, the lower it is the better. This means that you have no more than 30 percent of your balance used at a time. For example, if you have a credit card with a $500.00 credit limit, you will use no more than $150.00 at any given time.
Remember that not carrying a balance not only improves your credit score, but it also saves you money. Whenever you are carrying a balance on your cards, interest is starting to accumulate, costing you more money.
It is important to remember that when it comes to your credit, no matter how low your score is, it is possible to improve it. This is definitely hard work and the results will not be apparent overnight, so be diligent and patient. However, as you continue to put in the work and reclaim your good financial standing, you will start to see that all of this work is paying off. Do not be afraid to consult with a professional for help if you need it, such as a finance professional at your local bank.
