Ways in which Your Bad Credit History Can Be Corrected
It became clear that a bad credit score or credit history can cause several problems in your financial life. It may make it difficult for someone or a group to get credit cards, mortgages, loans, or even rental properties. The good news is, however, that your credit score is fixable given some time and work on your hands. The following are the major actions you may do to improve your credit score and fix your credit history: These are the major actions you may do to improve your credit score and fix your credit record:
Review Your Credit Reports
Before asking for credit, you should first review your credit report to find the areas causing problems. Within a year following the last request, each of the three main credit reporting companies— Experian, Equifax, and TransUnion—offers one free credit report. One should review the reports and question any information in credit bureaus that is inaccurate or out of current. Typical errors include viewing accounts you do not own, erroneous account status, and so on.
Pay Down Revolving Debt
Mortgage debt is one of the most detrimental types of debt because it is usually followed by revolving debt such as credit card balances in terms of credit utilization ratio (the amount of money owed to the credit limit amount). It is also wise to endeavor to reduce credit card and other revolving credit to below 3o% of the total credit limit. Catch up on all the overdue payments and in the future ensure that the total amount of credit utilized on cards does not exceed 50%.
Address Any Late Payments
This is a way of showing how good or bad you are in paying your bills and accounts, which constitute a large portion of your credit score. If there are some of the payments that were made later than 30 days before the due date, make sure that they are current and pay all of your bills on time from that time on. The best thing that an individual can do to maximize their credit benefit is to ensure that they do not have any adverse record of paying any of the creditor’s dues late in the last year.
- Strictly Limit the Use of Credit Right Now
- They should avoid applying for new credit in efforts to consolidate debt or find some money quickly since this can negatively affect their credit utilization ratio. Do not open any new credit accounts that could be reported on your credit report immediately after your credit score begins to rebuild. New accounts and hard inquiries are the worst when you already have a low credit rating and opening too many new accounts only makes it worse.
- Do not shut down the credit accounts that are not in your current use.
- The only time you should consider it necessary to close down your old credit card accounts even if you do not frequently use them is when there is an annual fee. This will ensure that your credit line is preserved because your total credit limit will be high. However, do not use these old cards to charge up more balances on them.
- Build New Positive Credit
- More of the credit accounts you should not open at the moment are: opening one new secured credit card. Consider using the card for small purchases to build up a good payment record in terms of timely payments by paying the balance in full at the end of the month. Thus, within 1 year, if you manage to pay your bills on time, you should be able to secure an unsecured card and thus you will continue to rebuild your credit score each time you make the monthly payments. Especially, do not use department store or retail cards as a rule, because these credit cards usually have very high interest rates.
- Correct Identity Theft Issues
- If you come across any accounts from your report that were created due to identity theft, report this case to the credit bureaus. To counter the claim that the accounts are your real accounts, you should support this with evidence that the accounts are fake. Your bureaus are obliged to delete the identified fraudulent transactions from your records. This can give a good washout of bad information on your credit report as long as it is reported correctly.
- Dispute Inaccurate Information
- Besides combating identity theft, when composing letters, you should dispute every piece of information that does not appear to be complete or is incorrect as per the records of the credit reporting agency. This could be collections accounts that you have cleared but still reflect on your credit report, items with no details like having negative balances, and credit limits that have been reported wrongly. Send the letters of dispute to have mistakes fixed or erased by the creditors/collectors.
- Become an Authorized User
- You can also find a friend or a family member with a credit card that has been active for a long time and with a good credit rating and ask him to allow you to be added to his credit card account as an authorized user. Everything from the card’s positive history is reported to your credit reports once you are an authorized user and will help give you a much-needed boost in credit score while rebuilding your credit.
- Monitor Your Credit
- Enlist in free credit monitoring services to ensure that you monitor your credit reports and your credit status frequently. These services can be found on most credit card forums and personal finance websites. By monitoring you can track the effects that the credit-building activities and the ability to dispute the errors immediately contribute to the increase of your score. The three credit reports are Equifax, Experian, and TransUnion; it is recommended to run a check on all of them at least once every four months to be fully informed.
Fixing bad credit is not a task that can be done hastily, but enhancing every factor that is pulling down the rating can yield great results. If you begin credit repair activity it is possible to add more than 100 points within the twelve-month to achieve a score of 700 and above. So, if you are motivated and ready to work, it will be easy to start rebuilding past credit problems. It will help you have good credit behaviors in the future so that you can hold some credit when you need it.
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