How to Fix Your Credit Score

No one likes a low credit score, but for many it happens all too easily. Losing a job, forgetting to pay bills, not having enough money to pay for everyday expenses or experiencing a medical emergency can all damage credit score. By the time a person gets caught up, the damage to the credit is already done.

Life can be difficult when you have sub-optimal credit. Acquiring loans becomes much harder while any loan you acquire will come with higher interest rates. You may not even be able to rent an apartment or will be required to pay a larger deposit. Moreover, many employers now check the credit score of prospective employees when hiring new candidates. In short, bad credit closes many doors for you.

This is the reason many people inquire about things they can do to fix their credit score. There are certain steps you can take to fix your credit score to make life easier for you. Some of them are listed below:

1.     Obtain and Check Credit Report

You can get an annual credit report for free from the three credit bureaus – Equifax, Experian and TransUnion. Obtain your credit report from these agencies to see where you stand financially. Where improvements need to be made? Have you missed payments or are there any late payments?

Check the report for fraudulent accounts and errors as well since they can bring down your credit score. If you find that something isn’t accurate, file a dispute so that the problem can be fixed.

2.     Arrange to Make the Payments

Your payment history affects your credit score. If you’re behind on your payments, it is important for you to catch up on them. Otherwise, no matter what you do, your credit situation will not improve. If you cannot make all the payments at once, contact your creditors to work out a convenient payment plan. Many creditors are willing to negotiate payment terms and you’ll likely be able to work out something that you both agree on.

3.     Make a Habit of Paying Bills on Time

Moving forward, don’t delay paying bills. This includes not only credit bills, but non-credit bills as well. If you don’t pay rent on time and delay paying utility bills, they may be reported to credit bureaus. Since payment history is important, it’s essential for you to establish a steady payment pattern to rebuild your credit. Avoiding reports about late payments or missing payments can help you establish a reliable payment pattern. If you’ve forgotten making payments in the past, set up an automatic withdrawal to ensure the same never happens again.

4.     If Possible, Don’t Close Credit Card Accounts

The reason credit card accounts shouldn’t be closed is that the longer an individual’s credit history, the better their score is. However, you might not be able to keep your credit card accounts if you’re too far behind in payments. If the repayment plan does require you to close credit cards, do it. Otherwise, keep them.

5.     Pay Down Your Debt

Credit utilization is another essential factor in credit score. It’s a measure of the total debt a person has and is expressed as part of the total available credit an individual is using. For instance, if the total credit available to you is $20,000 and you’re using $15,000 of it, then your total credit utilization will be 75 percent.  So, if you’re using a major portion of the credit available to you, it may go against you. Reduce your credit utilization by cutting back on expenses. Reducing the debt will help improve your credit score.

Bad credit isn’t the end of the road. You can repair your credit by doing the things listed above. It’ll take time, but if you’re consistent, you will be able to rebuild your credit. Feel free to reach out to us for more advice on how to fix your credit score.