Credit is a topic that most people don’t like discussing, especially if they have a poor credit history. There’s no single cause of bad credit. But talk to anyone with a low credit score and they might blame their present credit rating on overspending, medical debt or a recent job loss. Regardless of the factors that might have contributed to your low credit score, you can take steps to fix your score.
Bad credit doesn’t have to be a lifelong sentence, but it does require action.
Get a copy of your credit report.
If you never check your own personal credit report, now is the time to start. Free credit reports are available to every consumer on an annual basis. Your report details every creditor you’ve had, as well as credit activity. Many assume that information on their credit report is always 100% accurate. Unfortunately, this isn’t the case. The credit bureaus receive numerous updates from creditors on a daily basis. Consumers can have similar names or similar social security numbers. Thus, it is not unusual for wrong information to end up on a credit report. Check your credit report at least once a year and dispute any error. The deletion of a negative item can add several points to your credit rating.
Pay off old accounts.
Do you have an old judgment or collection account that remains on your credit report? Although your creditors may have forgotten about these accounts and stopped their collection attempts, the information may still be present on your credit report. This information takes, on average, about seven years to fall off your record. However, you can pay off these accounts and then ask creditors to delete the negative item from your credit report. Creditors are under no obligation to delete this information, but it doesn’t hurt to ask.
Maintain timely payments.
Do you regularly pay your bills late, perhaps 30 days past your due date? This move can severely damage your credit score. But you can rectify the situation by improving your payment habits. Resolve to pay every single creditor on or before your due date each month. Keep up this routine and you’ll see an improvement in your credit score in about six months. Don’t have the cash to pay a creditor? Negotiate an alternate payment arrangement to avoid a negative mark on your credit report.
Eliminate your debt.
Keeping a low or zero balance on your credit cards has an amazing affect on your credit score. The lower your consumer debt, the better. But if you shop frequently with credit cards and keep balances close to your limit, you’ll maintain a lower credit score. Develop a strategy to get rid of your debt fast, such as paying more than the minimum each month. You might stop credit card use, as well as sacrifice a few luxuries (dining out, shopping, vacations, a new vehicle) to generate extra cash to pay down balances.
