Simply put, having bad credit is hard. It can make buying things more difficult, and in some cases more expensive. Insurance companies can charge more, for example, if they know you have a low credit score. You won’t get low-interest rates if you apply for credit (assuming you have a score that will qualify you to apply) either. If you want to rent a home, you might come unstuck when they see you have bad credit, and as for getting a mortgage, it’s all but impossible. So it makes sense that you should fix your bad credit as soon as you can. Here are some ways to go about doing exactly that.
Look At Your Credit Reports
If you ask the credit bureaus (Experian, Equifax, and TransUnion), they will give you your credit report. They have to; it’s the law. In fact, they should give you a free copy of your report once a year. Alternatively, you can sign up for any one of a number of online agency websites that will give you all of your credit ratings in one place. You’ll need to pay for some of them, so shop around before you start spending money when you don’t necessarily have to. When you’ve signed up or received your report, take a good look at it and get to grips with understanding what it all means. Knowing your credit score is the first step to repairing it.
Dispute Any Errors You Find
If there is anything in the report that is wrong or that you don’t agree with, make sure that you take your dispute up with the credit agency in question. Sometimes your name might be linked to someone you don’t know; perhaps someone who lived in your home before you, for example. Or maybe there is still a negative mark in your report that relates to a loan that you paid off many years ago. All of these things could be affecting your credit, so removing them is essential. It’s best to do this in writing so that you have a record of what was said and when. Sometimes fixing these disputes can take a while, but it’s crucial that you deal with as soon as you can.
Sometimes your credit might be poor because of a seriously good reason. Sometimes it might be poor because of a terrible reason, but you’ve paid what you owed, and everything is now up to date. Either way, those negative marks will stay on your account for many years to come. So why not phone up your creditor and ask them to remove it? They might say no, in which case you’re no worse off. However, they might say yes. If you can prove that you made a genuine error when you paid late (or didn’t pay at all), and if they now have their money, then they might simply remove the mark. It doesn’t make a difference to them, but it could make a big difference to you.
Get A Credit Card
Getting another credit card might be the last thing you want to do if you’re having trouble with your credit score, but there is a reason why you might want to consider it. The more credit you have which you don’t use, the better it looks on your file. So if your other credit card is maxed out, it looks bad. If that card is maxed out, but you have another with no balance, it looks a lot better and can improve your score. What improves your score, even more, is getting a credit card, specifically for those with bad credit. Getting a card like this can mean you can build your credit quickly and repair any damage done. You can find out more on this website.
Pay Off What You Can
If you have a significant amount of debt and you’re able to pay off a fair-sized chunk of it in one go rather than paying monthly, it’s a good idea to do it. Although you might miss that money, your credit score will instantly increase, sometimes by a large amount. Spend a month living on a tight budget and use the money you save to pay off a debt, and you’ll be amazed at the difference it makes. Not only is this a good short-term solution to increasing your bad credit rating, but it’s also a good long-term solution to ridding yourself of all debt.
Pay The Highest Interest First
If you have multiple debts from different sources, look at the interest rates of each one. The ones with the highest interest rate should be your priority because you’ll end up paying a lot more money than you borrowed originally if you just pay the minimum on them. When you’ve paid off the debts with the highest interest, then look at which ones are the newest, and pay those off. It should leave you with the older, low-interest debts. These do much less harm to your credit, and although it’s a good idea to pay them off too, they don’t need to be quite so high on the list.
Share A Card
If you know someone with a great credit and payment history, see if you can become a second authorized card holder on their credit card. You will immediately benefit from the extra credit showing on your file and the fact that your friend has a good payment history. Be aware, though, that if they do miss a payment for any reason, it will show up on your credit score. Make sure you pick someone who is extremely reliable if you want to go down this route.
Don’t Close Accounts
Once you’ve paid something off, the temptation can be to close the account down completely. It’s a satisfying feeling. However, it may not be the best thing you can do for your credit score because you’ll be lowering the amount of credit you have available, and as mentioned earlier, the more credit you have that you aren’t using, the better. Cut up the card though, and dispose of it securely; you don’t want to start spending money on it if you’ve just worked hard to pay it off.