More than 16 percent of Americans have “very poor” credit, according to the average FICO scores, but they’re not the only ones needing to fix credit problems. Sixty-four percent of the remainder have “Fair” to “Very Good” scores, and there could be dings on all of them.
Those dings might come due to misreporting or legitimate credit missteps. Regardless, we’re about to show you how to fix your credit when it’s lower than it should be.
Table of Contents
1. Know What Is on Your Credit Report
The first step to a credit fix is to obtain a free copy of your credit reports from the three major reporting agencies. You can do this once every year without having to pay for it. The agencies are Experian, Equifax, and TransUnion.
It’s important to know what’s on your credit report because doing so ensures there are no errors or inaccuracies. Take time to go line-by-line and judge the accuracies and possible inaccuracies of the reporting.
2. Address Accurate Reporting
Another thing to remember if you’re wondering “how do I fix my credit” is to take care of the accuracies first. In other words, pay off outstanding debts or accounts that are overdue. If you can’t pay them off altogether, at least make sure the payments are current.
If you have debt that’s been sent to a collections agency, you’ll want to work with them to see if there are any agreements you can reach. It might not repair your credit overnight, but it will certainly set you on your way.
3. Lower Your Credit Utilization Rate ASAP
One of the most frequently quoted pieces of advice you’ll find when searching for “how to fix my credit” centers on your CUR— that’s the credit utilization ratio.
The credit utilization ratio is the amount of credit you use versus the total amount of credit available. If you have $50,000 in available credit and owe $25,000, your score will take a hit because you’re at a 50 percent CUR. Below thirty percent is the recommended ratio for the optimum credit score.
4. Challenge Inaccuracies
A bad credit score is not always your fault. Even if it is, there can still be inaccuracies that are worth challenging. This is true whether you’re an individual or a company.
While you can do a lot on your own, it can be intimidating and overwhelming to go up against the major credit reporting agencies. Seeking the aid of a credit repair attorney might be a better way to go, especially since they’ve got the inside track on expert witnesses and other resources to help repair your credit. Follow the link for more information.
5. Pay on Time
Another step that can make a big difference in how to fix your credit is making payments on time. When you pay on time, it will help your credit even if you feel like you’re still overwhelmed by debt.
On-time payments signal a responsible payment pattern. If creditors know they will continually get their money, they’ll be more inclined to work with you.
Do Not Wait to Fix Credit Problems
The longer you go failing to fix credit problems, the harder it will be to make major purchases that require some form of credit to accomplish—houses and cars, especially!
To ensure that doesn’t happen, read your credit report, attack the problems, challenge the inaccuracies, and behave responsibly when it comes to your credit utilization and overdue payments. Best of luck! For more financial tips and advice, check out some of our additional posts!
