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Finance

How To Fix Your Credit By Yourself

Are you looking for ways to fix your credit? If so, this article explains everything you should know.

You can have bad credit if you have an overdue student loan, foreclosure, or years of high credit card balances. Unfortunately, with poor credit, you may not be approved for products such as credit cards. Nevertheless, you can still take a mortgage or an auto loan, but you’ll be charged a higher interest. Note that with a low credit score, you are given loans at very high interest. For instance, a person with a bad credit score may have to pay over $50,000 interest on a mortgage. For a lifetime, you’ll have to pay more than $200,000 for having bad credit.

But all is not gone since you can fix your low credit card score. Some companies can help you improve your credit, but you can also do it by yourself.  Below are steps to repairing your poor credit score. They include;

Understand the state of your credit score

To know where you stand, you can use free credit score tracking apps such as Credit Sesame or Credit Karma. In most cases, credit scores fall between 300 to 850. A good credit score is usually between 700-740. With such a credit score, you are qualified for the best credit cards, not to mention that you are entitled to low mortgage rates.

Dispute any wrong information reflecting on your credit report

Though errors on credit score are rare, they still occur. But in most cases, bad credit could be entirely your fault. Note that you can’t succeed by trying to dispute accurate information. Though if you’ve spotted errors, whether minor or major errors, you should not hesitate to follow them up.

But how do you do that?

Provided you get a copy of your full credit report, review your identity information such as social security number, address, and the spelling of your name and your credit history.

Also, you should review credit card lists, significant purchases, and outstanding debts. In case you find any questionable items or mistakes, create a copy of the report, and be sure to highlight the error.

Now collect any necessary information you may have to support your findings. This is information such as the statement of your bank account. Furthermore, make copies of the bank statement as well. You’ll have to do all this since credit bureaus must be provided with proof to act.

Send a letter to a credit reporting agency to reflect the falsehood. Discuss the mistake, and don’t forget to add a copy of the report together with your documentation.

Stop the bleeding

Stopping the bleeding is crucial since it involves only three simple steps to fix bad credit. They include;

  • Paying all the debts on time
  • Pay down debt
  • Do not apply for credit.

However, before doing all these things, ensure that your spending rate matches your income. So, you have to evaluate your tax returns for the last two years. That way, you’ll know how much you make in a year. Then deduct your monthly expenses such as rent, car payments, health, home insurance, and rent from your income.

Start to pay your bills on time.

Timely payments of bills can help fix your poor credit score.

Clear down credit card balances

In case you get unsettled balances, you should include these debts in your budget every month until you finish.

Avoid applying for new credit

Do not fall for the temptation to apply for new credit, even when you are offered a discount. That’s because if you apply for a credit, it’s usually listed as ‘hard inquiry’ on your credit report.

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