Bad credit records haunt you when you try to get loans or credit cards. You may be tempted by ads online, on television or the radio offering to repair your credit, but the Federal Trade Commission warns that most companies do not follow through with their claims and explains that you can fix your records yourself for free.
Clean Your Credit Report
You may be able to clean up many negative entries on your Experian, Equifax and TransUnion credit reports if you can find any errors in them. There are mistakes in up to 25 percent of reports. The Fair Credit Reporting Act requires the credit bureaus to investigate if you dispute a mistake. Creditors frequently don't bother to respond, and the negative items must be erased under the law if it is not verified. Once they are gone, they no longer hurt your credit score or figure into lenders' decisions. You can check your credit reports for free every year through annualcreditreport.com, the FTC explains. Make disputes on the credit bureau websites or with letters sent through the mail.
Make On-Time Payments
FICO, the largest credit score compiler, recommends getting your payment record back on track if you've been late or completely missed credit card or loan payments. FICO cites paying bills by their due dates as one of the biggest factors in building or repairing credit. Mail payments early to account for possible postal delays or send them electronically so you can specify the date they reach the creditor. Every on-time payment counts towards credit repair because lenders put the most emphasis on recent activity.
Pay Down Debt
Your credit score is harmed by high balances on credit cards and other revolving accounts like those from retailers or gas stations, according to FICO. Channel as much money as possible towards reducing your highest balances every month. Redistribute the money onto your other debts once an account is paid in full.
Keep Using Credit
You get in trouble when you use too much credit, but you can't have a good credit score unless you are actively using accounts. You may need to get a secured credit card if your old issuers charged off the debt or you declared bankruptcy. People with bad credit still qualify for secured cards because they make a bank deposit as collateral. For example, you would deposit $500 with the card issuer and receive a $500 credit line. You use the credit card in the same way as a traditional account, and the bank reports your activity to the credit bureaus. This helps you as long as you manage the account responsibly. The bank seizes your deposit if you stop paying your bill.
0 comments:
Post a Comment