Fixing bad credit may be difficult but it is possible. If you’ve ever asked yourself how to fix your credit but don’t know where to start we’re here to help.
Steps To Fix Bad Credit
One very important thing to know when attempting to fix your bad credit is that it is a time-consuming process and you won’t be able to do it overnight. This means that to fix your credit you will need discipline and dedication. Follow these steps in order so that you can fix bad credit yourself.
Let’s Get Started: Check Your Credit Report
The first step in fixing bad credit is to check your credit report to get an idea of your credit status. It may not be as bad as you think or it may be worse than you think. Either way, don’t worry, with time and dedication you can fix your score no matter what it is.
To fix bad credit, it is important to know where you are now. The best way to do this is by checking your credit, you must know what your credit score is so that you can measure your progress.
Check For Errors And Mistakes
After obtaining a copy of your credit report and your score, analyze it and pay attention to the details to be able to find errors or incorrect information in your credit report. This will allow you to dispute incorrect information that, according to many experts, is found in a large part of credit reports and most people do not know.
Slowly But Surely Move The Needle
Once you have reviewed the errors found in your credit report and have corrected them, it is time to repair your mistakes. The next steps to fix bad credit depend a lot on the errors you find in your report.
Late payments will lower your credit score more than anything since these factors account for 35% of your credit score. If you have accounts that are 30 or 60 days late, you should bring them up to date and make payments before they are sent to a collection agency.
Also Read: 6 Personal Finance Tips That You Should Know
You can also negotiate with creditors and debt collectors to erase errors and some negative marks from your credit report. If you’ve ever had pet insurance for example, and you missed a payment, make sure you call the company first. Although they are not required to do so, they are often willing to negotiate if you explain your situation to them and agree to pay on time.
If you want to fix your credit but you have credit cards right now, you are in a better situation than many people. If you don’t have credit cards, you should consider opening a secured credit card to start building your credit.
Do You Have Credit Cards At The Moment?
If you have cards, you must use no more than 30% of your credit limit. For example, if the limit is $1000, you must use less than $300. This will help raise your credit score as it measures your level of credit utilization (which represents 30% of your credit score).
After getting past due accounts up-to-date and negotiating a payment plan with collection agencies if needed, the next step in fixing bad credit is to lower your existing credit card balances. There are a couple more things that also affect your credit.
Repairing Your Credit: Dealing With The Hard Stuff
If you have any pending lawsuits or debts that are reflected in your credit report, you must take the necessary steps to pay them or reach a payment agreement with the company. If you don’t, you will see that your credit score will remain low. Generally, these types of penalties remain on your credit report for 7 years.
Most student loans are never erased from your credit history, so you must make a payment agreement if you are behind on them. Talk to your lender to find out what you can do to get your loan current and what options are available to you. Make a budget, calculate it, stick to it and you can fix bad credit and get out of your student debt at the same time. Student loans are not erased from your credit history, no matter how long it has been.
In the aftermath of the 2008 economic crisis, many people have marks of bankruptcy or foreclosure. With these types of tickets, there is nothing you can do to fix your credit unless the information is inaccurate (if this is the case, you should dispute the information with the credit bureau, such as Equifax, TransUnion, or Experian, and fix this error with banks to update their records)
If you have bankruptcies or serious delinquencies on your credit report, you should focus on rebuilding it by adding a responsible payment history and showing lenders that you can manage your credit well. You can start fixing your bad credit after bankruptcy by applying for a secured credit card. You must use this card to make small purchases and pay the bill in full each month.
Also Read: 7 Steps To Make the Best Financial Planning
In Conclusion: There Are Ways To Get Help
Fixing bad credit is not always easy but doable. We hope that this information has helped you understand credit a little bit better and that you have good results by starting to build your credit again. If interested, you may also look into a credit repair company.
If you want to improve your poor credit score or to fix any errors in your report, go check out the Best Credit Repair Companies of 2021 according to Money.
Raúl A. Menéndez is a communications strategist, photographer and Community Outreach Specialist at Money. Explore more of his professional background on LinkedIn and find his photos on Instagram @raulovisual