The consequences of bad credit can impact employment opportunities, insurance rates and loan approvals. And because credit scores improve gradually, some people feel that's too difficult or impossible to reverse their bad credit. This attitude can affect the effort put forth to fix bad credit. Bad credit isn't permanent, and several methods can help improve a low score.
Credit Limits
The majority of credit cards have a limit, and going over or nearing this limit can hurt your FICO score. MyFico.com suggests paying down debts and keeping a low credit limit to help fix bad credit. The amount owed on your credit cards makes up 30 percent of your credit score. Increasing your score involves getting a handle on your debt and spending, and eliminating as much debt as possible. Shopping with cash and forwarding higher payments each month helps put a dent in credit card balances and fixes your score.
Due Dates
Some people develop a bad credit history because they can't pay their creditors on time. Creditors report your payment history to the bureaus, and failing to make timely payments not only results in derogatory remarks, but also a reduced credit score. Fixing bad credit entails paying attention to your due date and making sure your creditors receive your payments on time. There are ways to achieve this. Online payment systems allow you to make payments from your home computer. If mailing a payment, do so several days before the due date to eliminate lateness.
Rebuilding Credit History
Late payments and high debts aren't the only cause of bad credit. Bankruptcy and foreclosure can also hurt your score. And while these credit mistakes may seem permanent, it's possible to rebuild your credit history and get rid of bad credit. Because your finance options are few after bankruptcies and foreclosure, a secured credit card or collateral-based personal loan can help restore your rating.
Update Credit File
Don't allow mistakes on your credit report to lower your score and stop loan approvals. Checking your credit report is essential to good credit because creditors can make mistakes. Checking your report involves ordering your file from Annual Credit Report once a year, and probing each listing for accuracy. Inform creditors of inaccuracies and request an update to help fix your credit score.
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