Credit and Money
How to Repair Your Credit
When do you decide that you must learn how to repair your credit? It may be when you realize your car is getting old and you decide it’s time to get a new vehicle, that you discover your credit rating is in trouble. You may already know that your credit rating is not what it should be; perhaps it has taken a hit in the rough economy. For whatever reason, you need to do something about fixing your credit.
Get Your Credit Report
The first thing you learn in How to Repair Your Credit is that you need to order your annual free credit report from all three credit bureaus. These reports will list all the dings and bumps on your credit, and you will need this information so that you can decide on a plan of action. The reason why you want to order reports from all three credit bureaus is that most creditors don’t report to all three credit bureaus.
Examine Your Credit Reports
When you get your credit reports, examine them carefully looking for any errors and discrepancies. Then, make note of everything that you need to clear up; credit card accounts that are maxed out and over the credit limit, charged off accounts, accounts past due and in collections, accounts that don’t belong to you, and paid off accounts that have not been reported as such.
By law, you can dispute any inaccurate information. Each credit report should include instructions for disputing information contained in the report. Even if it doesn’t, you can still contact the credit bureau by mail with an explanation of each piece of inaccurate information. Sometimes, the best way to ensure that you don’t make any errors is to make a photocopy of the report, then use a highlighter to indicate the disputed items. Send the highlighted copy to the credit bureau with your dispute.
Catch up on Past Due Bills
Payment history makes up a large portion of your credit score. Every account reported past due is a ding on your score. The best way to correct past dues is to bring them to the point of being reported as “paid off” or “current.” If the past due account has not been charged off yet, then you have time to bring it up to current; you want to avoid charge offs. Pay off any account already charged off. For accounts in collections, work with the collection agencies to pay off your accounts.
Take Care of Maxed Out Credit Cards
Maxed out credit cards can seriously damage your credit rating. Thirty percent of your credit score is a based on a comparison of your total debt to total credit. Maxed out cards will cost you credit score point. Pay your credit cards so they are below the credit limit.
Establish New Credit
Once the negatives on your credit report have been resolved, you will need to begin establishing new credit. Once loans and credit cards are reported as paid on time, your credit report will begin to look much better. If you are unable to open a new account due to past delinquencies, try getting a credit card for a major department store. If that doesn’t work, then you may have to start with a secured credit card.
If your debts are more than you can handle, creditors refuse to work with you, and you are unable to resolve the issues on your own, you may have to consider consumer credit counseling. Whatever you do, don’t let accounts that are current fall behind in your attempt to learn how to repair your credit.
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