Financial institutions use a credit report to determine whether you will be approved for credit or pose too much of a credit risk. Many factors are used in determining your actual credit score. These include your payment history, the total amount of outstanding credit, the length you have maintained a credit history and the types of credit you have established.
Your Credit Report
If you are credit-challenged and cash-strapped, chances are your credit may be suffering. There are, however, ways to repair your credit.
First, get a copy of all three of your credit reports from the major credit bureaus and review them closely to ensure there is no erroneous information on any of them. If there are errors, write a detailed request to the credit bureau to have them corrected or removed.
Follow up 30 days after your request to ensure the corrections are made. Subsequently, order a copy of your updated credit reports. You may need to repeat this process until all errors have been corrected, and if they are not corrected within 90 days of your original request, you may have to file a complaint with the Federal Trade Commission. This is your legal right under the Fair Credit Reporting Act. Once errors are corrected, take additional steps toward repairing your credit.
Strategies
Simply put, pay all bills on time. On time means by or before the due date shown on the bill. Keep in mind that although a creditor cannot report a payment late as long as it's paid within 30 days of the due date, it can report the number of times a late fee is accessed or the total amount of late fees you incur within a specific time frame, so it's important to know this when attempting to repair your credit. Be careful to avoid anything that could possibly be a red flag to a potential new creditor.
Avoid having too many inquiries appear on your credit report. These lower your overall credit score, especially if repeatedly applications have resulted in denied credit with too many companies.
Don't ignore the fact that many utility companies report late payments to the credit bureaus. If you are struggling to keep these payments current, contact each utility company and request to get on a budget plan. If your request is granted, stick to the plan, and if you run into a problem, ask to renegotiate the previous budget plan.
Your balance to payment ratio is another important factor in keeping your credit file in order. If you have an account where you are only making the minimum required payment each month, not only will you take much longer to pay the balance off but it will harm your credit rating.
If you are struggling to make larger payments to chip away at the total balance owed, always pay more than the minimum balance on all credit cards, even if it's just a few dollars more.
Cautions
Be aware of companies that promise a "quick fix" for repairing your credit. Chances are, they will seek an upfront payment from you to begin the process. Even if a company appears to be legitimate, there is no reason not to investigate thoroughly. Many people have been scammed and left with worse credit than they had before, so remain cautious.
Conclusion
Remember that credit repair is not an overnight event. Most likely it was not damaged overnight, and it will require a serious plan of action to get back on track. With patience, discipline, consistency and determination, you can repair your credit and be on your way to a fresh start.
0 comments:
Post a Comment