Bad credit can be a real drag on your score and keep you from getting the financing or loans you need. While repairing it can take time, there are steps you can take to improve your situation that will help you build a healthy credit score. These steps include improving your on-time payment history, reducing the amount of debt you carry and disputing errors that may appear on your report. Unlike some companies that claim to “fix” your credit, it’s possible for you to do this work yourself.
Fixing your credit isn’t an instant process, but over time, you should see your credit scores improve as the negative information on your report gets older or falls off altogether. In the meantime, it’s important to develop a strong budget and follow good financial habits that will protect your credit score going forward.
The first step in fixing your credit is to check your credit reports from each of the three major bureaus. The FICO credit scoring system bases its ratings on the information reported to them by lenders and creditors, so it’s important to ensure that all of the data is accurate. A recent Consumer Reports investigation found that 34 percent of people who reviewed their reports found at least one error, including inaccurate balances on accounts they never opened, payments incorrectly recorded as late or missed and inaccurate revolving utilization. You can dispute any errors on your credit reports by sending a letter with supporting documentation to the reporting agency and lender. The credit bureaus are required to investigate your dispute within 30 days and report their results back to you.
In addition to addressing errors on your report, it’s also a good idea to pay down your credit card balances to reduce the amount of revolving debt you have. This will help you to improve your revolving utilization, which makes up 30 percent of your credit score.
If you’re struggling to keep up with payments, set up autopay on all of your accounts that allow it. This will help to prevent future late payments, which can significantly damage your credit score. Also, make a priority of paying off accounts that are currently past due; catching up on these will help to restore your credit score. Finally, be sure to pay off any accounts that have been charged off; while these accounts won’t hurt your credit score as much as those that remain open, they can still make it difficult to qualify for new credit or loans.
Avoid credit repair companies that charge a fee to correct mistakes on your credit report. These firms can’t do anything for you that you can’t do for free on your own, and many of them are scams. The only way to fix your credit is to ensure the accuracy of your own records and to work on developing sound spending habits that will help you maintain a high score in the long run. fixing credit
