Fixing a Damaged Credit Score Smart management of your credit always involves playing the long game and taking measured steps to restore order.Rule 1: Understand How You Got Bad Credit In The First PlaceKnowing how you got into hot water with bad credit in the first place can help you avoid making some common missteps down the road when it comes time to rebuild. These are just a few of the primary steps that should be covered:
Review Your Credit Score And Report
Within this context, monthly monitoring of credit score and report.credit repair (ad) Under federal law, you are entitled to a free copy of your credit report annually from each of the three major credit reporting bureaus—Equifax, Experian and TransUnion — once per year through AnnualCreditReport. com. That way, you can spot any errors or deficiencies13.
Fix or Dispute Any Errors
Dispute Errors in Your Credit Report If you discover inaccuracies such as late payments that were not actually made, or even accounts that are not yours amongst your credit report data then it is crucial to raise a dispute with the appropriate credit bureau. Correcting the errors with this process will boost it far more than any of these three general methods could improve your score23.
Always Pay Your Bills On Time
One of the aspects that have a major influence on your credit score is how consistently and responsibly you pay off bills. By paying your bills on time, you build goodwill with creditors, which should rub off well over long term in the form of improved credit rating. Auto-pay or reminders could keep you from ever paying a late fee on your student loan2.
Maintain your credit utilization ratio under 30%.
The percentage of credit utilization, or the amount you owe in relation to your total available credit limit should generally stay below 30%. Keep those credit card balances low, as a high utilization can work against you score wise (Pay down what is already owed and avoid maxing out your cards)14.
Pay Down Other Debts
Paying down your debt can increase that payment and lower the overall level of outstanding credit balances, two things that will improve your FICO score. Concentrate on repaying money owed to fastest however pay just the minimum payments with other debts. Not only does this help in your score, it helps with general finance health as well23.
Keep Old Credit Cards Open
How long you have had a credit history is also part of your score, so keeping old accounts open (even if they’re not active) can help. This serves in keeping a longer average account age which plays a positive role in your credit profile.
Avoid Applying For Credit If You Do Not Need It
Don’t open multiple credit accounts unless you need them as every new application can result in hard inquiries that may hurt your score for a little while. Instead strive to manage accounts better23
Step by Step, as soon as you do that consistently and start solving your score up over time.
