Steps to Take To Fix Your Credit Score

Some people don’t realize how a credit report impacts so many important things in their life. According to The Balance.com, an organization that is dedicated to helping people navigate through the special moments and milestones in their financial lives, your credit report contains a lot of information that many businesses use to decide whether to do business with you.

Today, credit reports are not only used to judge financial responsibility, credit reports and scores could also be used to judge a person’s character. So many employers are running credit reports on applicants as a way to learn more about the potential employee. That means a poor credit report could cost you a job offer. And, now insurance companies are even using credit reports to determine if they should offer you insurance and to assess the rate to charge you, so if you have bad credit you get higher rates.

That’s right, sometimes our credit reports are used to evaluate so much more than just our credit worthiness. In addition to the credit report uses we mentioned above, The Balance says some additional uses include: landlords and utility companies to determine if they want to do business with you, how much to charge you and how much of a deposit the should collect from you to minimize their risk; and even debt collectors and government agencies will use your credit report to determine ability to pay your debts, assess child support or even if you qualify for assistance.

Fixing Your Credit Score
Given the importance of your credit history and how it is used to judge your financial character, it makes sense that you need to work to ensure that you have a good credit report. According to bettercreditblog.org there are two strategies to use to improve your credit score and to ensure you have a good credit report.

First of all, you need to eliminate or minimize anything that is negative on your report including late payments, missed payments, bankruptcies and repossessions. Even applying for a lot of credit can hurt your credit report.
Next you have to add positive information by making good financial decisions and showing that you have good credit habits.

To start repairing your credit, it is important to understand how your credit report and score are created. There are 3 credit bureaus that financial institutions and lenders use to report your financial information:

You are entitled to see your credit report from each of these bureaus for free, at least once a year. Keep in mind, if you need to request it more than once a year, there may be a fee after the first free report. It’s always a good practice to request and review your credit report annually to help prevent identity theft and to ensure erroneous errors are not present as they can be costly. Obviously it takes time to repair your credit report and score, but it is well worth it because it will save you money, eliminate potentially embarrassing discussions with employers and reduce your financial stress and anxiety.

Steps To Take When Reviewing Your Report

The first step will be accessing your credit report from each of the credit bureaus (something could show up on one and not the other) to ensure that all three credit bureaus are reporting accurate information. By law, you are entitled to this information and cannot be denied access to your credit report, and as we mentioned before, you should get your first annual credit report for free every year.
Next, dispute any and all incorrect information impacting your credit report. Perhaps it’s an account still showing payment due that has been paid off, or even accounts that don’t belong to you. Never dispute accurate information, but you can try to minimize the damage by asking the debt collector to delete the negative information. Or, if you still owe on the debt, you may be able to negotiate a pay off agreement for deleting the negative information.
Now that the errors have been eliminated or the negative items minimized, you should focus on avoiding excessive credit utilization. Always make payments on time – even if it’s the minimum amount because you need your payment history to shine. Also, consolidate or pay off debt as soon as you can. If this is a problem, there are credit building loans available to help you consolidate and pay debt off faster. There are also a plethora of credit rebuilding resources and organizations that can help you rebuild your credit.

It’s certainly in your best interest to work to ensure that you always have a good credit report. But, even when you encounter negative problems, keep in mind, you’re not alone and over time you can have some of the negative reports removed from your report. In fact, even bankruptcies are removed from your credit report within 10 years depending on the type of bankruptcy you filed.

Want to learn more? Check out our related posts: The Importance of Your Credit Score and Understanding the Importance of Your Credit History

Steps to Take To Fix Your Credit Score

You May Also Like