How do I Fix Credit Issues & Raise Credit Scores?

Financial difficulty quickly takes a toll on your credit score. Approximately 30 million people in the United States are struggling with credit issues that interfere with securing affordable credit. If you have poor credit, it's possible to turn your situation around. Raising a credit score won't happen instantly, but over time it's very realistic to restore your credit.

Instructions

1

Order a credit report. The first step in fixing credit and boosting your score is understanding the current condition of your credit. Order a free credit report from Annual Credit Report. This organization is run by Equifax, Experian and TransUnion. You get access to all three reports when ordering through Annual Credit Report. However, to access credit scores, each bureau charges a small fee (under seven dollars each).

2

Circle problem areas. Payment history makes up the largest chunk of your credit score, according to MSN Money. Circle late payment issues and contact the lenders right away. Also, find revolving credit accounts (like credit cards and equity lines of credit) with high balances. Balances higher than 30 percent of the available credit will hurt your score. Focus on paying down these balances.

3

Handle accounts that are in collection status. Collection activity has a serious affect on your credit score. There are two options for handling these issues. You can make payment arrangements with the lender. Or, you can make a cash settlement, offering less than the loan obligation, to the lender. Both options will settle the debt for good and assist in raising your credit score.

4

Avoid closing older accounts. Once you pay off revolving credit, most borrowers want to close out accounts. However, keeping these accounts open will boost your credit score. Credit bureaus award higher scores to people with a longer credit history. Check on these accounts periodically to safeguard against unauthorized use.

5

Double check your credit limits. If a credit card company lowers your credit limit, this can adversely affect your credit. A lower credit limit means your balance may be higher than 30 percent of the total available credit. For example, a balance of $3,000 of a credit line of $10,000 won't hurt your credit (30 percent or lower). However, if the creditor lowers your limit to $5,000, a $3,000 balance is 60 percent of your credit. Partner with the lender to restore your previous credit limit.