When credit ratings can be the determining factor on you ability to purchase a home, car or other major item it is imperative to fix bad credit. Taking the necessary steps to improve your credit rating can guarantee you savings in interest rates and credit approvals.
Your very first step in fixing bad credit is to obtain your credit report and review it carefully. By Congressional law you are allowed to pull your credit report for free once a year to check for errors or fraud. If you choose to pull your credit score at this point it will cost you an additional fee that varies with each credit reporting agency. You may wish to wait to pull the score until after you have reviewed your report because any changes you may make will change your score.
Once you have printed your credit reports you need to carefully examine each report for accuracy. Often there are duplicate entries, out dated information or other adverse marks listed that affect your final credit score. Check each entry to verify balances, payment history and credit limits. All three of these items are considered when giving you a score.
If you find any items that are incorrect you have the right to dispute them. Disputes can be lodged against accounts if the account is not yours, payments have been made on time and recorded falsely or if any of the information is wrong. The credit reporting agencies have thirty days from the time of you entering the dispute to either prove their information is correct, change the information to be correct or remove the item from your record completely.
The next step in how to fix bad credit is to bring all your accounts current. This can be done either through contacting the credit issuer and making arrangements or through a debt consolidation company. Either route you choose, current accounts reflect much better on your final credit score then credit reports showing delinquent payments.
Pay down your debt! This will help you when you want to know the answer to “how to fix my bad credit”. Debt to credit limit ratio is a large factor when a credit company issues a score. If all your credit cards are maxed to the limit, or over, you are considered a bad credit risk. Keeping your balance about mid-way of your credit limit is often the best choice. Credit companies often frown on issuing credit to people who pay their entire balance each month because they will not make money off the interest.
If you fix bad credit rating you can ensure that when you do apply for a loan or a credit card you will receive a much better interest rate. This may not seem like much but over the course of time it can make a huge difference. For example a simple one percent difference in a mortgage rate can mean thousands of dollars either saved or spent during the course of the loan.
To fix bad credit takes some time and effort. There is no magical remedy that cures or deletes bad debt. But with due diligence you can take your bad credit rating and turn it into a great one. It can be done if you put in the time. Once you have straightened up any and all reporting problems it will be up to you to maintain that better credit rating. Always try to make your payments on time to avoid late marks and extra fees, check your credit report at least once a year and pay down your debt. This should help any one fix bad credit and establish a good track record.