6 steps to repairing your credit
Maintaining Credit is Very Important
Statistics from the credit bureaus suggest that 30% of Americans have a score of less than 600. Lenders usually require at least a 620 credit score, but some lenders will loan on a 580 score with high interest.
Did you know the better your score is, the better interest rate you will get from a bank? Interests rates are important because borrowing money is very expensive over the course of 30 years.
Credit repair takes time, but did you realize you could get a healthy credit score in just 6 months? I will summarize the 6 things on how to do it YOURSELF so there is no risk of being scammed credit repair companies.
Where to Begin
Get a copy of your report
The first thing to do is to find out where you stand! Everyone is allowed a free copy of their credit report every year from all three reporting agencies. In case you don’t know. those agencies are Experian, Transunion, and Equifax.
Carefully review all of the reports
Secondly, you’ll want to look at all three reports closely, and carefully. Especially if they are long, make sure to take your time and understand what is on there. You can never fix anything until you realize where the issues are at. If you see anything on the report that shouldn’t be there, then dispute!
Dispute Any Errors
The third action on this list is to dispute! Dispute anything on your report that is inaccurate, incomplete, or is unverifiable When you get the report, you’ll also get instructions on how the dispute process works. The credit reporting agencies make it very easy to dispute items on the report, via email, snail mail, or online.
Tackle Your Past Dues
Honestly, throughout my life I have been told that paying past dues on your credit report won’t make any difference because defaults have already been recorded. THAT IS NOT TRUE! These past due items cost 35% of your score! Also, charged-off accounts are equally as detrimental to a healthy score. Contacting the creditors who have been defaulted is the first step in the right direction. They may even settle for a less amount, or negotiate interest with you.
Get Debt Under Control
Credit agencies don’t like to see anyone use more than 30% of their available credit. Once it get close, or passes that number, you will see a hit on your score. Many credit card companies will give your FICO scorer for free. Monitoring your usage is important, so I use credit karma from my phone. It sends me weekly updates, and I like that.
Establish Positive Credit
Hopefully by this stage you have been able to clear some things up from your credit report. You should be able to get some different types of credit established. Opportunities for Credit cards, car loans, personal loans or lines of credit will be available to you, but don’t go crazy! Establishing credit takes a while, but even after a few months of positive reporting you’ll see your score go up very fast.
There are ton of resources online, here are a few more links to help you get started.