Fast repair of your credit doesn't have to involve spending money each month on a credit repair service or debt counseling. True, these services can help improve your credit score and remove mistakes from your credit report. However, you can achieve the same results on your own without spending a dime. There is no magic formula to repairing your credit. The key is acknowledging your mistakes and making better decisions.
Significance
Some people may downplay the significance of a good credit score. However, bad credit complicates the application process for a mortgage or auto loan. Lenders will note your low score and likely charge you a much higher interest rate, or offer undesirable terms. Applicants with a prime credit rating attain the best deals, and fixing your credit can help you save money on loans.
Considerations
Major credit blunders like filing for bankruptcy or living through a foreclosure can reduce your credit score by several hundred points. Regaining these points and repairing your credit history takes time. You can speed this process by acquiring a new line of credit immediately after mistakes to re-establish credit quickly. Secured credit cards are the easiest type of credit to acquire with bad credit. The security deposit you pay to your bank serves as collateral.
Prevention/Solution
You can stop bad credit and quickly repair your score by adjusting the way you manage your bills. Late payments are detrimental to your credit score. A history of paying bills late or skipping payments puts potential lenders and creditors on guard, and they are less likely to approve your loan and credit applications.
Warning
Some consumers are unaware of the credit damage that results from owing high credit card debt. MyFico.com advises that the amount you owe on unsecured debts account for 30 percent of your credit score. Someone with a maxed-out credit card is more likely to have a lower credit score than someone who pays off his credit card each month.
Expert Insight
The Federal Trade Commission recommends regular credit report checkups to ensure that your creditors report accurate information. Requesting reports yearly is the best way to monitor your personal record. Contacting the credit bureaus in writing is necessary to challenge errors and inaccurate updates.
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