Need a Credit Fix? Top Tricks to Repair Your Credit
Nearly one-third of Americans (33 percent) have a low credit score. So, if you are unhappy with your current credit score, you aren't alone.
But knowing that your problem is common doesn't help you fix it. And the longer you leave it, the worse the problem will get. How can you get a credit fix and raise your score, fast?
In this article, we'll explain how you can get a fast credit fix and get your score back up above the fair rating.
How a Bad Score Spirals Out of Control
Why is your credit score so important to fix, you might be wondering. Unless you're trying to get a mortgage or other large loan, why do you need a good score?
In reality, your credit score affects your whole life. Having a bad one is like being stuck in quicksand. It is harder and harder to get out of without a strong credit fix.
You may pay higher interest rates and insurance premiums. A low credit score can keep you from starting your own business or getting a job, a cell phone plan, a car, and an apartment without a short-term loan. All this can make it harder to pay off your debts, making your credit score sink lower.
If you have low credit, don't fall into this trap. You need a credit fix to get your score up and stop these negative effects.
Check for Credit Report Errors
The first thing you should do when trying to fix your credit score is look for errors that might be bringing you down. Over 10 million Americans have credit report errors that are bad enough to seriously bring down their score.
To check your score, get copies from the government's free service. Then, carefully go through everything.
Look for reports of missed payments that you know you paid. You can dispute any errors. Find as much proof as you can to show that the payment was made on time.
Another common error is mixing you up with someone else, especially if they have a common name. Also be wary of identity theft. If someone has taken out credit in your name, they can destroy your score before you even become aware of it.
If you find any errors in your score, you can dispute them with the big credit score companies. While the dispute process can be long and tedious, it is worth getting those errors off your record.
Strategically Pay Off What You Can
Start by paying off whatever bills you can that haven't already been sent to collections agencies. This will stop your score from sinking any lower due to non-payment, and gets you back on track to building a better score.
If you are able to pay off those bills, then you can start looking at the ones that are long overdue. Only start tackling these if you can keep your other bills, which haven't been sent for collections, under control.
Before you pay, contact the collections agency. Make sure that it will be removed from your report if you pay in full. Get confirmation of this in writing before you pay them anything.
If they won't remove it from your credit report, don't pay that one yet. Even if you pay it off, it will continue to affect your credit score. Your money is better spent paying back loans that will bring your score back up.
Become an Authorized User on Another Card
If you have friends or family who want to help you with your credit fix, you can use their good credit to help you.
They can add you as an authorized user on their credit card. As long as they are making payments on time, the good credit on this card will also contribute to your score. This will work even if you don't have a card for the account and never use it to make a purchase.
Be careful about who you ask. If you become an authorized user, you are liable for any debts or defaults on the card. So, if you pick someone who is in a bad financial situation as well, your score will only end up getting worse.
Increase Your Credit Limits
One of the major factors that go into calculating your credit score is your credit-utilization ratio. Basically, it compares how much credit you are using versus how much you have available.
If you have a credit card with a $2,000 limit and you owe $1,500 on it, you will have a much lower credit-utilization ratio than if you owed the same amount on a card with a $5,000 limit.
When you increase your credit limits do not increase your spending. Building up more debt will only make things worse.
Don't close down any of your cards either, as this will decrease your available credit. Doing so will make your score go down further.
A good credit-utilization ratio is under 30%. Paying off some of your balance will also bring this ratio down. Consider a small consolidation loan to help you get it under 30%.
Don't Open New Accounts or Cards
Increasing the credit limit on your cards is a good way to improve your credit score. However, opening new accounts in a bid to improve your credit-optimization ratio will just bring your score down. It is the opposite of a credit fix.
Applications for new credit will stay on your credit report. If you already have a low score, looking for more credit makes possible lenders think you can't handle your loans. Opening new accounts or cards will just decrease the confidence that lenders have in you, sending your score plummeting.
Wrapping Up: Getting a Credit Fix
These tips will help you with your credit fix. You can raise your score and break the cycle of bad credit and deep debt.
By looking for credit report errors, you can ensure your score is accurate. Then, paying off your debts and bills strategically will make your money go as far as possible to raise your score.
Becoming an authorized user on another user's card, or increasing your credit limits can also help you rebuild your score.
If you would like to discuss how a consolidation loan can help you on the first steps to a credit fix, contact us today.