Fixing your bad credit simply means that you will get rid
of all the negative aspects in your credit report. There are several benefits
when you are able to cure your bad credit and have re-established a high
credit rating. These benefits include better interest rates and faster loan
approval. In order for you to rebuild your credit, you should first know what’s
on your credit report. This way, you will have a clear idea regarding the
things that negatively affect your rating. Once you have an idea of the factors
affecting your credit rating, you can start repairing your bad credit.
Here are five ways to cure bad credit:
Find Inaccurate
Information in Your Credit Report
The easiest way to cure bad credit is to get rid of any
erroneous information regarding it. Clerical errors could drag your credit
score down. Therefore, it is imperative that you do not overlook these inaccuracies
on your record. You can submit a dispute once you have found the mistakes so
that they can be removed. It is stated by law that you are entitled to receive
your credit report for free from the three credit bureaus every year. You can
also request over the phone or through email if you find that more convenient.
Pay Your Dues on
Time
The most important factor on your credit report is
probably your payment history. This is because it has a huge influence on your
overall credit score. If you do not pay on time, this will definitely hurt your
credit rating more than anything else. This is simply because your payment
history is generally 35% of your final FICO score. In order for you to fix
this, you may want to pay your existing balances as soon as you can. If you
have an account that is a month or two late, prioritize it to prevent your
balances from taking a toll on your score. Remember that if you do not make a
payment for 90 days or more, this will be considered an extremely delinquent account.
Balances Should Be
Below Your Credit Limit
If your debt level is 30% more than your FICO score, this
can have a negative effect on your credit rating. Try as much as possible to
keep your balance to at least 30% of your credit limit. For instance, if your
card has $1000 limit, your balance should only be $300.
Get New Credit
It may be difficult to get an approval for a new credit
card if your credit score is low. However, there are still other options. You
can get yourself a gas credit card, a department store credit card, or those cards
designed specifically for people with bad credit. You can also get a secured
credit card. Once you have any of these types of card, ensure that you will be
able to establish a positive payment history. If you get denied, do not rush
and submit too many applications to several other creditors. This will only
hurt your rating even more.
Change Your Bad Spending
Habits
Oftentimes, the credit score is bad because of the
cardholder’s spending habits. Changing your old habits is crucial, especially
if you have a new credit card. Control your spending and charge only what you
can afford. Avoid paying in minimum and never skip on your payments.
Performing the abovementioned methods will allow you to
cure bad credit in time. Remember that your score will not change overnight, so
stick to the methods that you have chosen even if you have to wait long and
watch your credit history improve.
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