Credit Repair: Not A Lost Cause
If you are unhappy with your credit score, you are not alone. According to a recent study by the National Foundation for Credit Counseling, more than 30% of Americans would be more embarrassed to admit their credit score than their weight. The good news is that your credit score is not set in stone. Credit repair does not need to be thought of as a lost cause. You can start making moves now towards credit repair. According to Forbes, if correct actions are taken, you could start to see slight improvements within 30 to 60 days. Of course, nothing will change if you do nothing at all. Use this credit improvement cheat sheet to boost that powerful three-digit number into something you can be proud of.
Credit Repair Cheat Sheet
- View Your Credit Report:
Request a copy of your credit report from AnnualCreditReport.com. You are entitled to one free copy of your credit report per year from each of the three major credit report agencies, Experian, Equifax, and TransUnion. Set up a reminder to request one report each four months, so that you can monitor your credit score throughout the year. Monitoring your credit score on a quarterly basis will help you uncover any potential discrepancies or mistakes.
- Correct Errors:
The second step to improving your credit score is to check your credit report for errors. If you find an error, make sure to dispute it right away. You are able to dispute errors online through Experian, TransUnion, and Equifax. You can also call any of these agencies to dispute an item over the phone viathe phone numbers provided on your credit reports. You also have the option to dispute any items via direct mail.
- Get Caught Up On Payments:
Thirty-five percent of your credit score is determined by your payment history. If you have a bunch of credit cards and bills that have gone unpaid, be sure to start paying on them right away. Paying your bills on time will show lenders that you are a responsible borrower, and will raise your score over time. You want to avoid items going to collections, as this will remain on your credit score for seven years, even if you pay it off. Though paying a collections debt won’t erase it from your credit report, it will show that it has been paid.
- Improve Your Credit Utilization Ratio:
Your credit utilization ratio is a percentage that is used to represent the amount of outstanding balances on all of your credit cards divided by the sum of each of your cards’ limits. Having high balances compared to your available credit limit increases your credit utilization ratio, and has a negative impact on your credit score. Launch FCU recommends that you keep your credit utilization ratio at 30% or less. One way to improve your credit utilization ratio is to request a limit increase on your primary credit card. The key is to not spend more, rather keep your spending about the same. This will lower your credit utilization ratio, and over time improve your credit score.
- Don’t Throw Away Old Credit Cards:
If there are credit cards that you don’t use, and you are thinking about throwing them away, don’t do it. Keep these cards active, and put them in a place where you are unlikely to use them. This will help lengthen your credit history and keep your available credit high.
- Be Careful About Opening New Credit Accounts:
There is nothing wrong with applying for a credit card or a loan; however, you should be careful as to how often you do this. Every time you apply for a loan or a credit card your credit has to be pulled, which can have a major negative impact on your credit score if you have multiple lenders doing this in a short amount of time. In addition, opening numerous accounts at once can hurt your score by decreasing your average account age.
- Get A Variety Of Credit Types:
If you have gotten into financial trouble in the past due to credit cards, there are other types of loans that you can obtain to improve your credit score. Other loan types like shared secured loans, auto loans, and mortgages can all help improve your score if payments are made on time. Making on-time payments is key to building and maintaining a high credit score.
In summary, repairing your credit score overnight will not happen. Credit repair will require you to make changes to your current habits using the above guidelines. Improving your credit score will take patience and discipline, but will pay off in the long run. By improving your credit score you will also improve your ability to obtain a loan in the future and receive better interest rates on your loans. Everyone has to start somewhere. Why not start today! For additional information on the factors that determine your credit score, click here.
© Copyright 2016 Launch Federal Credit Union. All Rights Reserved
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