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Steps to Take to Fix Your Credit

Guest post by Elaine McPartland who explains some simple steps you can take to start fixing your credit. Elaine is a writer from ConsolidatedCredit.org. Leave a comment or reach out to her online.

Your credit scores are critical to your financial success. From home ownership and your ability to rent property, to credit cards or even your ability to obtain employment in some fields bad credit scores can have a dramatically bad impact on your life. This makes it imperative that you know what steps to take if you need to fix your credit because of credit damage. You can take immediate action to counteract any credit issues and avoid making additional mistakes that could damage your credit scores.

If you know your credit scores are low, start by requesting free copies of your credit reports through annualcreditreport.com. Every consumer in the U.S. is allowed by law to obtain free copies of all three reports every twelve months, so if you haven’t downloaded your reports recently, you can acquire them for free. Having your credit reports allows you to review your reports for errors so you can correct any mistakes you find.

Although you may expect the credit bureaus to maintain accurate records, studies show one in four credit reports contain an error that would negatively impact that consumer’s credit scores. One in twenty contain a mistake that would shave 25 points or more off a credit score, which could easily mean the difference between getting approved and being rejected when you apply for a new line of credit. The credit repair process allows you to dispute these mistakes with the credit bureaus in order to increase your credit scores.

Once you’ve repaired your credit, it’s time to take steps to rebuild your credit scores. This involves offsetting any legitimate negative information that appears in your credit reports to drive down your credit scores.   You can offset this kind of information by taking steps to reduce your credit card debt load to improve your debt utilization ratio, as well as by making all of your payment obligations on time as required to build a positive credit history. These are the two biggest factors in calculating your credit scores, so improving these factors as much as possible can go a long way in helping you build credit.

If you need new accounts to help you build credit if you have extremely bad credit, don’t opt for an unsecured credit card. Instead, get a secured credit card and deposit enough money to get a decent credit limit. You can also take out a small personal loan, since this gives you another type of debt which will look good to creditors that you have a diverse portfolio of debt. Apply for new lines of credit sparingly, since too many credit checks in a six-month period can decrease your credit scores significantly.

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