How to Repair Credit
Your credit score determines the loan options that are available to you. Having a desirable credit rating can help you to access more loan options at lower interest rates. Whenever you have a negative credit rating, lenders find it difficult to grant you loans. Although there are loans for people with bad credit, these loans have high interest rates. This is the reason why credit repairs have become popular. Eliminating your debt improves your credit rating, and makes it easier for you to access credit facilities that were unavailable to you previously. With credit repair, you can choose to mend your own credit score or you can obtain the services of a company that specializes in fixing your credit.
How to Repair Credit on Your Own
- Look Into Your Borrower’s Financial Report
First and foremost, check your credit report for accuracy. You will need to get all the authorized financial statements from the three credit bureau: Equifax, Experian, and TransUnion. Access all three from AnnualCreditReport.com. If you prefer hard copies, you can send in a request for it to be submitted to you via mail. When you receive the reports, you will need to carefully review each report. You need to review all three because the information the three reports are usually not the same. when an information is reported on one of them, it may not be recorded on the others.The first information to review is your basic information. Make sure that the information on the reports is actually yours. Check the lines of credit and confirm that they are all yours. Also, verify that negative items such as late payments are correctly reported. You should also look at all your open and closed accounts to confirm that they are accurate. In the nutshell, make sure all the information in your report is correct.
- File Disputes
When you identify any errors you will need to file a dispute for the information to be corrected. You can file a dispute by mailing a certified letter to the credit bureau. The letter should list all the negative items you will like removed on your credit report. You should include any available evidence when filing the dispute. You should also include your name, contact information, and address when filing a dispute. The credit bureau typically replies to dispute disputes within 30 days. It can sometimes take up to 45 days. You can dispute the report online, however, to get maximum results, it is better to dispute the report by regular mail.An investigation will be launched. The credit bureau will contact the information provider, and they will, in turn, need to provide evidence about the correctness of data on the credit report. If they establish that there’s a mistake in the data given report. If they establish that there’s a mistake in the data given, they will submit a report stating so. You can request for that the report to be forwarded to all organizations that have accessed your report in the last 6 months. You should check to verify that the information is corrected on your report. Your credit score may improve if the information is corrected.
- Pay Off Your Debts
Since you are on a mission to repair your credit, you should focus on paying off your debts. First, pay off debts that weigh heavily on your credit score first. Medical debts don’t really give a negative impact on your credit rating and so you should pay off all other debts before you pay off your medical debts. When you’re making payments, make full payments to reduce the time limit for how long those debts can stay on your report. Make sure you have evidence of all payments you make so that the lender does not come back to you claiming you have not made payments. You can when you pay off your debts, it will take a month or two for it to reflect. You should monitor your report to confirm that it has truly reflected. You can still file a dispute with the credit bureau if the disputed items and paid debts have not reflected on your report after two months.
- Lower your Credit Utilization Ratio
Another way to improve your credit score is to reduce your credit utilization share. This ratio is the ratio of your credit limit to your debts. If you max out your cards your credit score reduces drastically. You should pay down your balances to increase your credit score. When you want to pay down the balances on your credit card, you should first focus on cards that are almost maxing out.
- Become an Authorized Card User
You can also benefit from a friend or relative with good credit standing. You can negotiate with your friend and then they will include you as a certified member of their account. When they add you, their credit card account will be added to your credit report. This will be a positive entry on your report. This is a shortcut to credit repair that can improve your credit score. This can be quite risky in the sense that when that friend or close relative stops making payments, it will also reflect on your credit report. It will affect your credit score and you cannot afford to have a negative entry on your credit score. In this case, you should be cautious about the person you decide to take this step with. In the same way, if you do not pay off your debts, it will affect the other person’s account.
- Request a Limit Increase on your Credit Cards
Even if you cannot pay off your debts quickly to increase lower your credit utilization ratio, there is another tactic you can try. With this, you can call your credit card companies to request an increase in your credit limit. You are not increasing your credit limit because you want to spend more. It is only to make the percentage of your debt look smaller than it is. This, in turn, lowers your credit utilization ratio. Some credit card companies may not agree to increase your credit limit, however, if you lucky some will agree. If you succeed in raising your credit limit, you should be cautious so that you do not spend more.
- Consolidate your Debts
You can consider loan consolidation if you realize that you are having problems making payments at the end of every month. Sometimes, you cannot provide the payments every month because your income can no longer cover your monthly expenditure and loan payments. Debts that leave in this position are usually credit cards since their rates are high. When you get to this point, the best thing to do is to try debt consolidation. With debt consolidation, all your loans will be combined into one loan. A lender will grant you a personal loan that will cover all the previous loans. You will then pay off all the previous debts with the loan that the lender grants you. You will now be required to make monthly payments to the new lender only. Usually, these loans are offered at lower interest rates compared to the credit card rates. You will then make lower monthly premiums. Sometimes, the lender will pay off the loans for you and what you have to accomplish is to will pay off the loans for you and you need to do is to negotiate on the monthly payments for the new loan. If you are able to negotiate monthly payments that you can pay comfortably, you should make it a point to make regular payments. Your credit score may take a hit temporarily when you consolidate your loan. However, your credit score will gradually increase if you continue to make payments. Late or missed payments will not be good for your credit when you are trying to repair your credit. Try as much as possible to avoid them.
- Get a Credit Builder Loan
One major thing that helps improve your credit score is regular payments. Making regular payments proves to the lender that you are a responsible borrower. This also reflects on your financial statement. This can be proven when you get a credit builder loan. This can be proven when you get a builder loan. The lender will grant you the loan but you will not be able to use the cash until you have finished repaying the loan. Since it is risky for the lender to grant a loan to you, keeping the money until you have finished repaying the loan protects the lender.
When you do the above-mentioned things, your credit score will improve. However, it is important not to go practices to lower your credit score. You should always stick to your budget. You should also use your credit cards responsibly, and you should pay your bills on time.
All these are things you can do yourself to improve your credit score. However, if you cannot do these things due to time constraint or any other reason, you can get the services of a professional credit repair company. There are professional credit repair agencies that can help you out. The topmost agencies include Lexington Law Credit Repair Agency, CreditRepair.com, Ovation Credit Repair, Sky Blue Credit Repair, and The Credit People. When selecting an agency, select one that is compliant to the Credit Repair Organizations Acts (CROA) and one that has a good rating from the Better Business Bureau.