Having negative marks on your credit report can seriously affect big life decisions. Typically, when you make any large financial decisions, your credit will be checked. If your score is low, it can affect your interests rates and even cause you to be denied your loan. We’ve all made mistakes, we’re here to help you repair your credit so your finances are spic and span. There’s no time like the present to commit to improving your credit. Below is a guide to what to do and what not to do to get that credit score in check.
Step 1: Get a full picture of your Credit
Nowadays there are many credit reporting sites that offer a look at your current credit score for free. We would recommend, however, taking advantage of your full credit report which you can get free each year through Transunion or Equifax. By running a full credit report, you can see exactly what is affecting your score. This way you have a better idea of what needs changing to boost your score. Don’t expect a change overnight, any company that touts a large change in a short amount of time isn’t worth your time.
Step 2: Dispute any Discrepancies
After getting your credit report, look at it closely and pay particular attention to red marks. If a bill or account is reflected on your report that has already been closed or remedied, you can dispute it. Many times, these marks can be removed from your credit report, it just takes a bit of communication from you. Reach out to your bank, credit company, or any organization that you’ve settled a debt with to get the negative mark removed from your credit score. A credit repair service can also do this, but it is possible to do it yourself.
Step 3: Take steps to pay off debts
The first balances you should focus on paying off are those with the highest interest rates or biggest balances. If you have any bills that have gone to collections, pay those immediately. Anything you can put towards your debt repayment is worth it. If you have any wiggle room in your budget, put it towards an automated payment on your debt.
Step 4: Don’t close Your Accounts
It may be tempting to close out your credit accounts after you’ve repaid them. This could actually hurt your credit score further. If you need to close any accounts, close your newest accounts. Your older credit serves as a way of showing your longevity of credit. Learn from your credit usage and try to limit credit to emergencies to avoid piling up debt.
Step 5: Pay Close Attention to your Accounts
Going forward, keep a close eye on your credit balances and don’t allow them to creep above thirty percent of the total amount of credit available to you. A good rule of thumb is to pay off your credit balance each month and if you are unable to do so, cut your spending down. Your balance should always remain below thirty percent of your entire credit allowance.
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