How to Repair a Bad Credit Score

How to Repair a Bad Credit Score

Living with a low credit score is difficult. You may find yourself getting rejected for loans and credit card applications and being subjected to higher rates of interest, among other things. Statistics show that at present, almost one-third of Americans have a score lower than 601. This is indeed alarming.
If you are wondering how you can improve your personal credit, the following expert recommends are ways in which you can boost your low score :

1. Check for credit report errors
Before you begin to repair credit, it is important that you verify all the information that the credit bureau has about you. You can source your credit report from either one of the three main bureaus, which are TransUnion, Equifax, and Experian. Check if all your personal details, such as name, age, and social security number, are correct. After that, make sure that all your accounts are being reported. Check for any credit card numbers or accounts that do not seem familiar. Check which late payments are affecting your records. Once you have the right information at hand, it becomes easier to begin fixing your bad credit. If there are any errors in your credit report, dispute them at once with the credit bureaus.

2. Monitor your credit score
Once you have requested your credit report and disputed any inconsistencies, you need to keep monitoring it regularly. You can do so through websites like Credit Karma. Such websites often offer insurance to protect you in case your identity gets stolen and your card gets misused. Monitoring your credit score means you always stay in-the-know and can act as soon as something seems suspicious instead of waiting for it to impact your personal credit.

3. Set payment reminders
Did you know that making payments on time is one of the biggest factors that influences your credit report? In fact, a whopping 35% of your FICO score is determined by your payment history. Many banks offer to send email or text alerts to remind you when your payments are due. Alternatively, you can make use of the autopay feature on your card to take care of your utilities payments such as electricity. Setting up payment reminders will ensure you never go late and, therefore, get you started on your way to a healthy credit report.

4. Apply for a credit card
Sometimes, not having a credit card might also be the reason your credit scores are low. Go ahead and apply for one. Make sure that you pay your outstanding balance on time every month and avoid carrying over balances. If the reason you have avoided a credit card is because of the temptation to spend beyond what you can pay back, you can opt for a secured credit card. For a secured credit card, you need to deposit a certain amount of money into a bank account against which you get a line of credit. Therefore, if you deposit USD $100, you get a credit line of USD $100. This way, you always stay safe and never spend more than you can afford to pay back.

5. Pay off personal debt
Paying off all your debts is easier said than done, but it is a necessary step towards improving your FICO score. Find out which of your loans or credit cards is charging you the highest rates of interest and begin by paying those off first. You can maintain minimum payments on the lower interest rates. Avoid using your cards as much as possible. If you have filed for bankruptcy in the past, your credit score would have taken a huge hit. However, the impact does lessen over time as long as you take efforts to build your credit once more.

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