A good credit history allows you to get mortgages and auto loans at lower rates. Credit repair companies make promises to help improve your score, but these companies often charge fees for their services, and instead of improving your credit, they simply teach you how to manage your credit better. Rather than use a professional service, consider ways to fix your credit on your own.
Pay Down Your Outstanding Debt
Carrying a low balance on your credit cards or paying off your balances completely with each statement can significantly improve your credit score. The amount you owe creditors plays a huge role in credit scoring, as this single factor makes up 30 percent of your FICO credit score. Getting rid of balances and keeping credit card balances below 30 percent of your credit limit looks good from a lender's or creditor's standpoint and helps you qualify for loans.
Pay Bills on Time
Forgetting a payment will likely end in a late fee from your creditor, and if you're more than 30 days behind on a bill, creditors report the delinquency to the credit bureaus. Negative information of this sort can trigger a drop in your credit score and rejected credit applications. Because payment history makes up 35 percent of a credit score, sending payments by the due date helps fix your credit rating. To avoid late-arriving payments, consider paying online early using online payment systems, or mailing a payment immediately when you receive a statement.
Review Credit History
Checking your own credit profile does not lower your score. In fact, this move is recommended by the Federal Reserve to help you fix your credit rating. Low ratings caused by creditor mistakes, identity theft and outdated information contained in your credit report can stop loan and credit card approvals. Get your free report once a year from annualcreditreport.com. You are entitled to one free copy of your report each year from all three major credit bureaus.
Rebuild Credit History
A bankruptcy seriously hurts your FICO credit rating. Fixing credit on your own calls for rebuilding your credit history and raising your personal credit score. Ways to repair the effects of a bankruptcy discharge include getting a secured credit card from your bank and paying the security deposit -- around $500 -- to secure the line of credit. Another option involves applying for a credit card for people with bad credit or getting a subprime auto loan. Managing these accounts -- by making timely payments and keeping debts low -- will help you fix your credit score.
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