Fix Credit Score With 15 Practical Advice!
How to Fix Credit Rating? Are you aware that you can fix your credit score in 15 easy steps? You may think the best way is to ignore it, which is usually not recommended. Or maybe you know some people who told you they could doom your credit for life with just one call to the right person. However, this is not true.
Your main goal is to build a strong foundation for your credit. Once you have a base, everything else will work out over time. It all hinges on starting with the right intentions and a little bit of knowledge.
Why do you have bad credit?
Bad credit is a big problem for many people, especially those who have gone through a period of financial hardship.
Bad credit is often the result of a wrong decision. Such as applying for a loan or loan-related debt that you couldn’t afford to pay back.
If you’ve been late making payments on debt, it could be because you were unemployed and too scared to make those payments. Or maybe you had an emergency and didn’t have enough money to cover it.
We’ve identified four common reasons why people can have bad credit
1) You don’t pay your bills on time.
Bad credit doesn’t just happen because someone’s late on payments. People who are late on payments are often behind on their other bills, too.
2) You don’t use your credit cards wisely.
Balances tend to build up after periods of financial hardship, so if you’re using one card for everything, that card will get maxed out sooner rather than later. If you’re not using your cards wisely, don’t expect them to work for you when times get tough again.
3) You don’t pay down your debts in full every month.
Paying down debt certainly helps with your score. But if you can afford to make partial payments each month instead of the total amount required by the creditor (such as with home loans).
It can help keep your interest rates low and show lenders that you’re committed to paying off the balance in full in the future. Which usually cuts into the amount that’s charged off in a bankruptcy or foreclosure.
A bad credit score can have serious adverse effects on your social, personal and professional life. Getting a private loan becomes impossible with bad credit history.
This makes it difficult for you to take up any business opportunity or to expand your business. A bad credit score also stops you from buying a brand new car or taking your family on vacation. Because most of the time, people with bad credit scores are refused by lenders for processing auto or home loans or any other kind of loan, for that matter.
Now that you have a clear image of how a bad credit score affects you. It’s time to do something about it. The steps below will provide you with enough information to take control of your credit and how to fix your credit rating.
10 Steps to Get Started
You can not change the fact that you have a bad credit rating. But there’s no reason why you shouldn’t know how to fix bad ratings and how to prevent future credit problems. Here are ten steps to get started:
1. Get your credit report.
Order your free report from all three of the major credit reporting bureaus: Experian, Equifax and Illion.
2. Correct any mistakes on your credit history
Once you have found all errors on your credit file, look over them carefully. Most are minor, but sometimes they are significant. Such as old delinquency that shows up on your report that is no longer showing up on your new score or incorrect information that appears on your report even though it does not apply to you.
Many times, these will be hard to spot until you look closer at the record itself. So pay attention here!
Sometimes this means contacting each of the three credit bureaus for different reasons individually. You may need to contact Experian because they have information on some sort of purchase history that doesn’t show up correctly on other records.
You may have noticed something about their score going up when they correct some data, so let them know! Also, check with the Social Security Administration. Because they may have changed some information about your name or birthday on their system that caused some problems with the other two bureaus.
They also have a lot of data out there on people so let them know if they have recently had a change of address or anything.
3. Figure out why you have a bad credit rating.
Your bad score may have several causes., but if one of them is that you’re using a lot of credit cards, then the best thing to do is not use any more until your score improves. If you want to repair your credit rating, it’s essential to fix the problem before you start digging deeper into other causes.
4. Set and stick to a budget.
A budget is a beneficial tool in helping you stay on track with your financial goals. It will help you prevent impulse buys. And keep track of what you have left at the end of each month so that you don’t waste money on something that isn’t necessary.
5. Try to avoid using more than one type of account when applying for a loan or any other kind of financial product.
This will contribute to minimizing your risk of having your entire history judged based on a single account’s experience, which could negatively impact how much money a lender would lend you.
6. Pay off old debts as quickly as possible so that they do not affect your credit score negatively any longer.
If a debt has been paid off for a while, try not to apply for a new loan or card with the same company because this could cause a negative impact on your score again, even after the balance has been paid off entirely and no longer affects your score.
7. Do not apply for new loans or other financial products until at least six months have passed.
From the time that you have paid off all existing debts and taken care of any outstanding accounts from previous loans and other financial products, you have received in the last six months from different lenders and companies.
8. Keep a clean credit history.
Maintaining a clean credit history is about making the right decisions — and not making the wrong ones — and it’s something that can be improved with some training and experience.
First, bear in mind that maintaining a clean record doesn’t mean you never make mistakes. It means you learn from those mistakes and don’t make them again.
If you make any mistake, correct it as soon as possible, but don’t engage in any kind of behaviour that you know will hurt your credit score long term.
9. Stay out of debt.
It is not always easy to say no to free money, but if you’re in debt, it’s essential to keep clear of it. When you’re in debt, your credit scores are likely to suffer because the lenders will see the negative effect on your ability to pay.
If you can’t pay off your debts, then you should consider making a plan for how you’ll get out of debt.
If your financial position has deteriorated to the point that you are unable to make payments on time, consider contacting your creditors. They may be prepared to collaborate on mutually advantageous terms.
10. Don’t accept gifts or loans from anyone you don’t know well or who isn’t a family member.
Even if a lender claims they’re a reputable source for a loan, it’s easy to go wrong by accepting a loan from someone who doesn’t know you or isn’t a family member. It can be tempting to get a friend’s offer to help you out since they know that you’ll pay them back, but lenders who don’t know you well might not realize when something is out of your control and when it isn’t.
This can leave you in worse shape than before if the lender decides to call the loan due because of unexpected circumstances in your life.
When’s the last time you had your credit report double-checked?
Errors on your credit record may lower your credit score. Click to fix your credit rating.
Learn more: How to Get an 830 from 620 Credit Rating?
5 Ways to Understand How Your Credit Score Works
1. Know your credit score ranges
Each credit score has a “credit score range” — the difference between the scores that indicate you’re a reasonable credit risk and those that mean you’re a terrible risk.
Here are some ranges:
- Excellent (720 to 850),
- Very Good (660 to 719),
- Good (629 to 659)
- Fair (629 and below).
2. Keep track of your credit scores
Keeping track of your credit scores is an essential part of managing your credit.
Checking your credit report at least twice a year will help you monitor the information on examining your credit report for irregularities if they appear on your report.
3. Understand credit utilization and balances
Credit utilization is the total amount of credit you’re using relative to your available credit. For example, if you have a $2,000 limit and a $3,000 balance on your card, your utilization is $1,000. Credit utilization is essential because it can affect your score under two main categories:
Balance ratio. The ratio of the number of unpaid balances to the amount of available credit is called your “balance” as well as “credit utilization.” This tends to be a more influential factor than payment history or types of credit.
For example, if you owe $1,000 and have a $2,000 limit and a 60 per cent balance ratio (60 per cent of your credit limit is unpaid), that’s going to be a big problem for your score. The closer you are to the maximum (50 per cent or higher), the worse it’s going to be for your score.
Total outstanding balance. The total amount you owe — including any fees — is referred to as the “total outstanding balance.” If this exceeds 30% of your available credit (the maximum allowed), you’ll see an immediate impact on your credit score.
4. Check with lenders to understand the factors that will affect your score
In most cases, it’s a good idea to make sure your lender understands the factors that will affect your score and gives you some idea of what they will be.
If you’re applying for a mortgage, make sure the lender will not only provide you with a written explanation of the factors that will affect your credit score but also has it readily available on its website or that it emails you a copy of the explanation as part of the loan approval process.
5. Take action if you find a problem with your credit score
You can get in touch with an experienced credit lawyer like one- in Australian Credit Lawyer who can guide you out with anything related to credit repair. A credit lawyer is the best person to turn to if you feel like something is wrong with your credit score or if you are facing any kind of legal issues related to your credit.
Even if you’ve been initially rejected for a loan or been offered an unfair loan rate, or have been given a loan with harsh repayment conditions, contact an Australian Credit Lawyer.
Australian Credit Lawyer helps people who have been victims of credit-related discrimination.
Conclusion
There’s no doubt that getting a higher credit score requires some work on your part. The good news is that your credit score can be fixed. You are not required to wait for a miracle to occur — you can fix your credit rating right now by following a few simple steps.
By following these tips to fix your credit rating, you can get your life back under control and avoid future financial problems.
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