If you have ever defaulted on a loan payment, had years of high credit card balance, or lenders have been forced to foreclose on you, then there are chances that you have a bad credit score. If this is the resulting case with you, then your credit is poor, and getting approval for credit products like credit cards would be difficult. Even if a lender is entirely willing to lend you an auto loan or mortgage, a poor credit score leads to a higher interest rate. Luckily for you, there are many varying ways you could improve your credit score, and below are some simple tips and tricks to help you repair your credit in no time.
Evaluate Your Credit Report
Credit bureaus are required to provide each person with a free copy of your credit report every year. All you have to do is request it, and it will be sent to you. Evaluate your credit report by checking your credit scores and all the information reflected in the reports. The credit reports should appear the same, but sometimes they do not. There are many occasions when information on credit reports vary, and the information provided is inaccurate.
When you go through your credit report, the next step to take in repairing your credit is disputing any discrepancy you might find on the report. Although poor credit scores are totally your fault most of the time, there are chances of inaccurate information being entered into your report. Check the credit card list, purchases, and outstanding debts for errors, and if you come across any, then it is important to highlight the error. Make sure you make another copy, gather information to back up your claim of an error, and then write to the credit bureau explaining the discrepancies along with a copy showing the highlighted errors.
Cut Down On Spending
After assessing and correcting any error on your credit report, the next thing to do is cut down on your spending. A mistake most people make is spending more than they can usually afford every month. This is a vital step in repairing your credit as lenders take note of major purchases on your credit report. To help you along, a budget is needed. Write out your regular unavoidable expenses and your spending habits; create a limit and stick to it.
Pay Your Bills On Time
This cannot be overemphasized; it is important that you pay off your monthly bills when they are due. When you fall behind on a payment of any kind, the bills can easily compile till you’re knee-deep in bills. On-time payments reflect positively on your credit score, and it assures lenders you can meet up with payments. This might mean getting credit for basic bills will be difficult, but it also helps you to avoid more bills that could negatively affect your credit card balance.
Pay Off Credit Card Balances
One way to cut down on your monthly spending is to take care of outstanding balances on your credit card. Add this to your budget and pay it off little by little till you’re all done with it. Take note of your credit limits and strive not to reach the maximum using your credit card. Credit bureaus take note of charges on your credit card when calculating your credit score.
Don’t Get A New Credit Card
It can be quite tempting to apply for a new credit card but don’t do it. Every credit card application on your credit report appears as a hard inquiry, and too many on your credit report tend to affect your credit report negatively. Apply for credit just a few times, so it doesn’t stop your credit score from getting repaired and climbing up.