What You Need to Fix Your Credit

Bad credit not only causes higher loan interest rates, it also affects your ability to rent an apartment, get a phone line and in some cases, land a job. A credit score represents your credit history and potential credit worthiness with a numerical value. Those with a poor score or bad credit history can fix their credit with some time and hard work.

Bills

You cannot fix your credit score until you begin paying your bills on time. All the changes in the world cannot erase negative payment history with a creditor. Sometimes this means re-evaluating the budget and cutting out unnecessary expenses to pay necessary creditors in a timely fashion.

Credit Card Debt

Good history with revolving credit card accounts helps credit scores. The ratio between the amount of credit card debt to the total credit card limit, however, also affects the score. Try to keep each credit card balance below 30 percent of its limit, states MSN Money. When only considering credit scores, paying down cards closer to their limits trumps paying down high-interest cards.

Avoid

Along the same lines, some people like to consolidate their credit card balances onto one lower interest rate card. If raising your credit score represents the most important present goal, consolidation actually harms your credit score because you want smaller balances on several cards as opposed to a large debt-to-credit ratio on one card. Also, avoid applying for new loans or credit cards when trying to raise your credit score. Unless you have no credit cards, applying for new accounts can lower your credit score, according to MSN Money.

Mistakes

Some credit problems happen because of mistakes on the credit report. If this happens, contact the creditor with the error and get a letter in writing stating the correct information. Then send that letter to the credit bureau for an investigation. If the credit bureau deems the information mistaken, it will fix the credit report, which sometimes increases your score.

Beware

Some companies try to take advantage of people with poor credit. They claim to erase bad credit and remove bankruptcy information forever from a credit file. The Federal Trade Commission recommends ignoring these false claims because they scream Scam." True credit repair takes months and hard work. No legitimate agency makes claims that sound too good to be true.