How Can I Fix My Poor Credit? Credit Repair Techniques & Tips
Friday, April 18, 2014, 1:00 AM | Leave Comment
As the economy begins to recover, there are more people than ever that are staring at a poor credit report. The good news is that there are steps you can take to repair your credit and get your rating back up to a high level.
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The First Step in Credit Repair
Before you start to repair your credit, you must know the exact state of your credit.
According to LaToya Irby, writing on the subject of credit repair, you can get a free credit report from each of the three major credit agencies. You are only allowed to get one free copy each year. After this, you will need to pay for them.
The three credit agencies that creditors report to are Equifax, Experian and TransUnion. It is important to have all three reports because creditors often report to one or two agencies but not all three. What this means is that your credit report may look different from one agency to another.
There are a few techniques that will help build up your credit rating with any lender. Many people can often handle these things on their own, but others may need help from a credit repair company.
Before you contact one of them, Toptenreviews suggests to check them out to see if they are legit or a scam.
Although lenders have different formulas for determining your credit rating, there are certain factors that are common to all of these formulas. Some of these methods will help quickly while others will take more time.
The following is a list of the most productive techniques to begin repairing credit, and all of them you can do yourself.
- Fix mistakes on your credit report
- Bring your credit card balance to under your credit limit
- Pay down your balance
- Negotiate with creditors on closed accounts
- Bring your accounts up to date
- Make your current payments on time
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Fix mistakes on your credit report
Every negative mark on your credit report will bring down your credit rating. If you find a mistake on any or all of your credit reports, you can file a dispute form with the credit agency to have them remove it. It must be a mistake, however, because otherwise only a lender can remove a negative mark on someone’s credit report.
Removing one or more negative marks on your credit report can have a quick effect on your credit rating.
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Bring your credit card balance to below your credit limit
If you have any outstanding credit cards that are currently over the limit, try to pay them down to at least below the limit. Your credit rating is hurt by having credit cards that are over the limit.
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Pay down your balance
You need to start to pay down some of the outstanding balance of your debt. One of the factors involved in calculating your credit rating is the percent of credit available to the amount owed. Having all of your credit cards charged to their limits hurts your credit rating.
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Negotiate with creditors on closed accounts
If you have one or more bad marks on accounts that are no longer open, you may be able to negotiate with a creditor to remove the negative mark on your report. Depending upon the creditor, they may not agree to this, but you have nothing to lose.
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Bring your accounts up to date
If you have any accounts that are past due, bring these accounts current as soon as possible. Current debt that is overdue is a strong negative factor on your credit rating.
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Make your current payments on time
This is one of the most important aspects of good credit. It accounts for a third of your credit rating. Once you have brought your accounts to where everything is current, make sure to pay your debts on time. Not only does this help to build your credit, but over time, the negative marks on your credit for late payment will be dropped from your report. In time, your credit rating will be very good.
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Chris writes for his blog The Financial Park and is trying to learn how to improve his credit and financial situation. You can find him on Twitter @ChrisLindsey23.
