Your credit rating is quite important. It can help to determine what things will be more accessible to you or what will actually be tougher to attain—in financial standards. Financial institutions always emphasize the need for a stellar credit record and score. However, it is a fact of life that mistakes and mishaps will happen. You can find yourself in situations that are beyond your control and have a direct impact upon your credit rating or score. When that event does happen, the question that you should ask now is:
How can you fix your credit?
There are several ways to go about it. Here are a few that you can do today:
Obtain your latest credit report
When it comes to your credit, you have to make sure what your standing is. You can do that by requesting a credit bureau for a copy of your latest credit report. Don’t worry about any fees you have to pay if you’re ordering your first report for the year. Credit bureaus are law bound to provide you with a free copy of your credit report—provided that it’s the first copy you’ve asked for. If you have asked for a previous report in the same year, there will be fees but aren’t that large.
Your credit report will provide you with a frank and realistic overview of your standing. It will provide you the next step of what you can do in case of errors.
Contest and correct any errors in your credit report
One of the biggest reasons why having your latest credit report is important is it allows you a chance to study it well.
Be mindful of any errors that might be in your credit report. If there are any, make sure that you dispute those errors and have them stricken from your record. Studying your credit report can help you determine if you’re the victim of identity theft or erroneous reports.
If however, there are no errors in your credit report and it still doesn’t look good, it’s time to turn to the other ways to fix your credit!
Start building a positive credit history
When it comes to fixing your credit, being proactive with the following steps will help start the turnaround of your credit:
Avoid being late with your payments
Late payments are one of the biggest things that hurt your credit standing. It would be important to review how you used to handle your payable commitments. Try reviewing your payment history and see if you’ve built up the habit of letting the due days pass by. If you have, it would be prudent for you to go cold turkey on that.
If you’re able to, start being strict with yourself regarding payment schedules! Maintain a healthy payment history for this point on. That is one good way to revitalize your credit standing.
If you have outstanding balances, settle them immediately
The only thing worse than being late with your payments is completely disregarding your payables and acting like they don’t exist! One thing that everyone needs to remember is that with every single day that passes by where you don’t pay your overdue bills, the closer it becomes to being charged off. When account gets charged off, it’ll eventually be escalated to a debt collection agency.
Such reports will stay in your credit report for years to come. Having that in your credit report will severely impede any plans you have for credit rehabilitation.
Slowly but surely reduce your debt
You can start this up by limiting the mileage of your credit card. While going cold turkey on your credit card use can also end up hurting your credit score, while you have debt, it is important to limit its use. Have a sit down with your credit statements and determine just how much you may owe for your accounts. This is particularly important if you have more than one account.
From there, come up with a solid payment plan to slowly shave off your debts. Be frank about how much you are able to afford. While it would seem ideal to close accounts, doing that will actually hurt your credit score more. Yes, we understand it may sound like a “between a rock and hard place” situation but it is manageable if you’re completely committed. Once you start shaving off your debts, aim to keep your credit balance low.
If you feel lost, get help
Bad credit isn’t the end of the world! What’s important is that you’re aiming to fix the problems that have seeped into your spending habits. We understand that trying to navigate the whole credit thing can be confusing. It requires a clear mind and long term planning. Sometimes, it’s easy to get overwhelmed. When that happens, it would be in your best interest to call in an expert to help you out. Here are some ways in which you can obtain help for your credit rehabilitation:
Attend financial counseling
There are always people who are willing to help out. When it comes to finances, it would be wise to look around for a place to get financial counseling. Often, you can count on the National Foundation for Credit Counseling (NFCC). They’ll be able to provide you with helpful information on how your credit score can be revitalized.
They can set up an appointment where the can build your consumer and credit profile. From there, they’ll be able to direct you a particular department that specializes in the issue that you’re facing. What’s great about such organizations is that they’re not just about helping you fix your credit score. They will also help you build habits that will help keep you away from relapsing into bad spending or negligent habits that caused your bad credit to begin with. The NFCC aims to improve financial literacy because it will help the nation in the long run.
Now, determine which tips you can apply today and start rehabilitating your credit!