Living with bad credit in America today is possible, but it's tough. Bad credit makes many things difficult, impossible, or more expensive. For example, did you know insurance companies often charge a higher interest rate for drivers that have bad credit scores? If yes, then Improve your credit score is the most important and top prioritys for you.
If you're getting new utilities turned on in your name, the company will check your credit to decide whether you should pay a security deposit. We all know that banks check credit scores before they give you a credit card or a loan. As years go by, the list of companies who check your credit will probably grow instead of shrink.
1. Get the Latest Copies of Your Credit Reports
Before you can start repairing your credit score, you have to know what you need to repair. Your credit report contains all the mistakes you've made that have led to bad credit. Read through your credit report to see what are the negative items affecting your credit score.
2. Review Your Credit Reports for Errors
Once you have your credit reports, read through them completely. If you have a long credit history, your credit reports might be several pages long. Try not to get overwhelmed by all the information you're reading. It's a lot to digest, especially if you're checking your credit report for the first time. Take your time and review your credit report over several days if you need to.
3. Dispute Credit Report Errors
You have the right to dispute any information in your credit report that's inaccurate, incomplete, or you believe can't be verified.
When you order your credit report, you'll receive instructions on how to dispute credit report information. Credit reports ordered online typically come with instructions for making disputes online, but you can also make disputes over the phone and through the mail.
4. Tackle Past Due Accounts
Your payment history impacts your credit score more than any other factor; it's 35% of your score to be exact.
Since payment history is such a large part of your credit score, having several past due to accounts on your credit report will significantly hurt your score.
Taking care of This are crucial to credit repair. Your goal is to have all your past due accounts reported as “current” or at least “paid.”
5. Bring High Account Balances Below Your Limit
Your credit utilization, a ratio that compares your total debt to total credit, is the second biggest factor that affects your credit score. It's 30% of your score. The higher your balances are, the more it hurts your credit score.
Having maxed out credit cards costs precious credit score points (not to mention costly over-the-limit fees). Bring maxed out credit cards below the credit limit, then continue working to pay the balances off completely. Your credit score responds better to credit card balances that are less than 30% of the credit limit, below 10% is ideal.
6. Get New Credit
After you’ve resolved the negative items on your credit report, work on getting positive information added. Just like late payments severely hurt your credit score, timely payments help your score. If you have some credit cards and loans being reported on time, good. Continue to keep those balances at a reasonable level and make your payments on time.
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