If you’ve been struggling with poor credit, it’s important to know that you’re not alone. Millions of Americans are in the same boat and are struggling to make ends meet due to their poor credit. Fortunately, there is a way out! There are steps that you can take to fix your credit and start rebuilding it to a more positive rating. In this article, we’ll discuss how to fix your credit, including how to dispute errors on your credit report, the benefits of credit repair and counseling, and how to build better credit going forward.
What Causes Bad Credit?
Before we dive into the different steps you can take to fix your credit, it’s important to understand the different factors that can contribute to a lower credit score. Here are some of the most common causes of poor credit:
1. Missed or Late Payments: Making late payments or simply missing payments can significantly hurt your credit score. Even one missed payment can have a negative impact on your credit report.
2. High Credit Utilization: Making charges that exceed the amount you can reasonably pay off can have a negative effect on your credit rating.
3. Too Many Credit Applications: Multiple applications for new credit accounts can appear as too much of a risk for lenders and negatively affect your credit score.
4. Too Many Types of Credit: Having too many credit accounts, such as credit cards, retail accounts and mortgages, can also trigger alarm bells for lenders.
5. Negative Entries: Negative items on your credit report, such as bankruptcies, foreclosures and charge-offs, can have a serious impact on your credit rating.
The First Step: Checking Your Credit Report
Before you begin the process of fixing your credit, the first step is to check your credit report. Your credit report contains information about your credit history, including any accounts that you owe, payment history, and other factors that lenders use to decide the risk of lending you money.
You’re entitled to a free annual credit report from the three major credit reporting agencies: Experian, Equifax, and TransUnion. It’s a good idea to order a free credit report from each of the three agencies and compare them for accuracy.
When reviewing your credit report, look for any errors or outdated information. Make sure to check for any errors, since mistakes on your credit report can have a serious negative effect on your credit rating. You can dispute any errors or outdated info with the credit reporting agency or directly with the creditor who reported the information.
Disputing Errors on Your Credit Report
If you find any mistakes on your credit report, you can contact the credit reporting agency (TransUnion, Experian, or Equifax) and file a dispute. You can file a dispute online, over the phone, or by mail. When you file a dispute, you’ll have to provide proof that the information is inaccurate.
It’s important to note that the credit reporting agency doesn’t have to remove the incorrect information from your credit report. It’s up to the creditor who reported the information to verify the accuracy.
Negative entries such as bankruptcies, foreclosures, and charge-offs cannot be removed from your credit report. These negative entries can remain on your credit report for up to 10 years, depending on the type of entry.
Benefits of Credit Repair and Counseling
It’s important to note that it’s illegal for a company to promise to repair your credit by removing negative information from your report. If you’re looking for DIY credit repair, you can dispute any errors yourself. However, if you’re feeling overwhelmed by the process, it can be a good idea to seek help from a credit repair company or credit counseling agency.
Credit repair companies can review your credit report and make sure that any mistakes are corrected. These companies can also work with the relevant creditors to come up with a repayment plan or other solution.
Credit counseling services can also help. These services can provide you with advice and guidance on how best to manage your finances and debt repayment. A credit counselor can help you come up with a plan to address your debt and get back on track.
Building Better Credit Going Forward
Once you have a handle on any errors on your credit report and have worked out a debt repayment plan, it’s time to start building better credit going forward. This involves making sure you make your payments on time and keeping your credit utilization low.
It’s important to make sure you’re paying your bills on time and in full each month. A good way to do this is to set up automatic payments with your creditors to ensure your bills are paid on time. This will also help to improve your credit score.
In addition, it’s important to keep your credit utilization low. This means not charging anything to credit cards that you can’t realistically pay off each month. It is generally recommended to keep your credit utilization below 30%.
Conclusion
Rebuilding your credit rating can be a long and tedious process, but it’s important to remember that it can be done. Taking the time to check your credit report for any errors, working out a plan to address any debt, and making payments on time are all important steps to take. And if you’re feeling overwhelmed by the process, don’t be afraid to seek help from a credit repair or counseling business.
Final Thoughts
The first step to fixing your credit is to review your credit report for accuracy and make sure any errors are corrected. You can do this yourself or enlist the help of a credit repair or counseling company. Once you have addressed any errors on your report, it’s time to focus on making sure all of your payments are made on time and your credit utilization remains low. With time and dedication, you can rebuild your credit and get back on the path towards financial stability.
