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How to Fix Your Credit Score

How to Fix Your Credit Score

Credit Report

 

 

 

 

 

 

 

 

 

 

Due to our current economic problems in the United States, many people have had issues with keeping their credit scores high.  Blemishes on your credit report cost you, but it is never too late to fix the problem.   The main thing to remember is that this will not happen overnight, but you have to start somewhere.

You don’t have to hire someone to fix your credit score. You can take matters into your own hands and improve your credit score by following these steps.

  1. You need to get a copy of your credit reports from these bureaus:
    1. Equifax
    2. Experian
    3. Transunion

 

fico-credit-score-distribution-USA

 

 

 

 

 

 

 

Go over your credit reports very carefully.   You will notice that each one is different.  This is common, since not all companies report to all three bureaus.  Look for errors on your reports.  If you find errors, typos, outdated information you may need to dispute the information.

 

  1. Almost every person has an error on at least one credit report.  Credit bureaus compile the information from your creditors and they never verify that the information is correct.  Keeping an accurate credit report is your job.   Bad debts, tax liens, judgments, foreclosures and repossessions will be removed from your credit report after seven years. Revolving accounts, such as a line of credit, that report positively will remain for ten years after they have been closed. Bankruptcies will also report for ten years.  You did not have problems overnight and guess what – you can’t fix them overnight either.   One thing you can do is to request that positive closed accounts stay on your report longer than the reporting period.   Under the Federal Credit Reporting Act (FCRA) you are allowed to dispute anything on your credit report.  The FCRA website give an in depth article on how to dispute things on your report.
  2. You need to start a plan to reduce your overall debt.  Call creditors and negotiate with them and see if they will reduce interest rates.  Start a budget.  Yes that is right start a budget.   I suggest you go to “http://www.youneedabudget.com/” and gain control of your money.
    1. Close out your newest accounts so that you don’t lose your longer credit history.
    2. Pay this month’s bills with last month’s pay check.  That is right; get at least a month ahead on your bills.  Financial expert Dave Ramsey recommends having at least 6 months of living expenses in an emergency fund.
    3. Close out accounts slowly over several months.
    4. Don’t add new debt.
    5. Verify that all accounts you’ve closed are reported as “closed by consumer” for the best report.
    6. Even if creditors offer to raise credit limits, allow yourself only moderate credit limits.
    7. Keep your balances low and avoid revolving balances.
  3. You need to keep working on this.  It may take you many years if you have a really bad credit history, but you may be able to clear it up in a few months if you only have a few blemishes.

 

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