5 Steps to Repairing Your Credit and Improving Your Credit Score
Bad credit scores can prevent you from getting loans, mortgages, and sometimes even renting an apartment. Repairing your credit to improve your credit score may sound daunting, but even the least financially savvy individuals can rebuild credit with some advice. Follow these 5 steps to start on the path towards repairing your credit.
1. Obtain Your Credit Score and Report
The first and most important step to repairing your credit is to obtain both your credit score and credit report. Your credit score is a three-digit number that ranges from 300 to 850; the higher the number, the better. Your report will show you what accounts you have, your payment history, and any public records such as bankruptcies, liens, judgements, etc. This information will be useful when assessing your current credit situation.
2. Fix Inaccuracies on Your Report
Once you have your report, comb through its contents carefully for any inaccuracies. These may include entries from delinquent accounts or late payments that you did not authorise. If you come across any errors, send a dispute letter to the credit bureau with proof of your payment. The bureau will conduct an investigation and update the report as appropriate.
3. Consider Credit Counselling
A credit counsellor can help you budget for your day-to-day expenses and debts, and can recommend strategies for getting the most out of your limited income. Credit counselling services can also help you come up with a plan to pay off your loans and other debts. Courts in some states will even lower your interest rate if you enroll in a credit counselling program.
4. Strategise Your Payments
With the help of a credit counsellor or your own research, figure out a way to pay the highest interest loans first while keeping up with the minimum payments of your other debts. Making your payments on time will not only improve your credit score, it will help you get out of debt faster.
5. Reap the Benefits
As you stick to your payment plans, budgeting strategies, and credit counselling sessions, you will begin to see the rewards of repairing your credit. After six months of these efforts, request a new credit score to see how far you have come. With diligence and consistency, you’ll be able to improve your credit score and manage your finances better.
Repairing your credit and improving your credit score may be difficult, but these tips will give you a start on the path to a healthier financial future. Making a few smart decisions along the way will help you increase your credit score, and having a better score will open more financial opportunities for you.
