In this article, we’ll explore just what you need to know in order to begin the process of repairing your credit score.
Should you find yourself in the position of having obtained a less than satisfactory credit score, all is not lost. There are a number of very definite steps you can take to address the problem and over time bring about improvements in your overall credit score.
The first thing to understand about your credit score is that, in the US, your FICO credit score is normally the one that really matters as their information is used in approximately 90% or more of all credit decisions, especially in order to buy a house.
So, the obvious starting point is to check your credit score properly before you begin. You can obtain a free copy of your credit reports from the three biggest credit bureaus in the US. They are TransUnion, Experian and Equifax. Note that you’re entitled to one free copy of your credit report from each of these bureaus every 12 months.
If you haven’t already done so, get a free copy of your credit score from these three sources
The first and most important step is to check your credit reports for errors. Bear in mind that your credit reports contain the data which is used to calculate your credit score. Any errors that you find that may be adversely affecting your credit score therefore, needed to be disputed without delay.
The key to repairing your credit reports and therefore your credit score follows a number of logical steps, the following will help you:
- Be sure to make your credit payments on time. If necessary setup payment reminders so that you are not late in making payments. Making payments on time is a major factor in improving your credit score.
- Reduce the amount of credit you have. This is often easily said but in practice is more difficult to do. However, this is a major step towards improving your credit score.
- Credit cards – it is absolutely crucial that you stop using your credit cards. This is by far the most expensive way of spending money. By using your credit reports you can make a list of all your current credit cards and then, go online, and check their current balances. Once you have done so, use what available budget you have to come up with a payment plan giving priority to the card which has the highest interest rate. At the same time maintain the minimum payments on cards with a lower interest rate.
- You must get into the habit of paying your bills on time without fail. If you have missed payments you need to get up to date as soon as possible. Note that the longer you pay your bills on time after having fallen behind in payments, will increase your FICO score.
- The effect of your older late payments decreases over time. This means that if you can get up-to-date and develop a pattern of paying on time this will begin to outweigh your previous bad credit history.
Finally, you need to understand that paying off a collection account doesn’t remove it from your history. It will stay on your credit reports for seven years. Having said that, if you can get your good payment history moving in the right direction your FICO score should gradually improve.
I hope that you have found the above tips useful and a good starting point to begin improving your credit score. Click here for your free credit repair e-book.
