Five Ways to Cure Bad Credit

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.