However you got there, you can find your way back from a bad credit score. It won’t be quick and it won’t be easy, but it is well worth the effort. Too many aspects of modern life rely heavily upon your ability to maintain a strong credit rating. Where you live, what you drive and even where you work can all be affected by the information on your credit report.
Here is a list of steps you can take to rebuild your credit.
1. Examine Your Credit Reports
Free copies of each of your three credit reports are available at AnnualCreditReport.com. Look over them for errors, as well as entries of which you have no recollection once you have them in hand. It could well be bad information that is bringing your score down.
Dispute those entries if that turns out to be the case. Pay close attention to accounts that may have gone into collections, notations of late payments and anything having to do with public records. These notations will give you clues as to where your problems lie and what to do to correct them.
2. Bring Your Bills Up to Date
One of the factors weighing heaviest on your credit score is the timeliness of your payments. Late payments, or worse — missed payments — can cause a significant drop in your score.
The best way to counter this is to bring past due bills current and keep them up to date afterwards. Setting up automatic payments is a good way to ensure your bills are paid on time.
3. Reduce Outstanding Debt
Balances totaling more than 30 percent of a credit card’s limit can cause your score to drop. Your rating will also suffer if the total of all the debts you owe is more than 30 percent of the credit available to you as a whole. Referred to as your “credit utilization ratio,” this measure is indicative of how heavily you rely upon credit.
The more you appear to do so, the lower your score.
For situations in which your debt load is too heavy to pay off, looking for alternative ways to deal with it is advisable. This can include debt consolidation, counseling, management or settlement. It’s helpful to be aware of debt settlement pros and cons — as well as those of all the other strategies listed above if you’re thinking to go that route.
4. Look into Getting Another Credit Account
You might need to avail yourself of a secured credit card if your score won’t qualify you for a standard card. The beauty of this tool is you can set your own limit, as it is predicated upon the amount of a deposit you place with the card issuer to “secure” your card. Treated just like a regular card by merchants and credit bureaus alike, your score will climb as long as you use the card responsibly.
By the way, be careful to apply only for what you know you have a good chance of getting. The more applications you submit the more times your credit score will be checked. Each inquiry holds the potential to reduce your score — unless they’re for the same type of credit and filed over a short period of time.
These are four substantial steps you can take to rebuild your credit. There are a number of others you can implement as well. You’ll find a more comprehensive list at Experian.com.
One more word of advice: There really is no need to pay for a credit repair service. You can do everything they’d suggest you do — on your own.