CREDIT REPAIR PROCESS

How to Improve your credit score?

There are many ways to fix your credit score. Remember, it is very important to check your credit score first to see exactly where you stand. Below is a list of ways to protect and insure you have a healthy credit score.

1. Keep your old cards open

Old, active credit cards keep your credit age high and contribute to your overall available credit, thus positively impacting your utilization ratio.

Some companies may close old cards if they don’t see any activity. One trick to avoid this is to automate payments with that card. For example, you can set up autopay for a bill to the card and then set up autopay from your bank account to the card.

There are times when keeping an old card open might not be the best option for you since you may need to pay annual fees and any other associated expenses. If you need to close a card, you should calculate your utilization ratio with the remaining credit you have available to see where your ratio will fall.

2. Pay Your Bills on Time

Lenders look at your payment history to determine how likely you are to keep up with payments. Payment history also has the biggest impact on your score and a single late payment can drastically drop your score. Here are a few things to keep in mind if you’re currently catching up with your bills:

  • Missed payments can remain on your credit report for seven years.

  • Paying off a collections account won’t remove it from your credit report.

  • Contact your creditors ahead of time if you have or know you will have trouble paying.

3. Set Up Payment Reminders

An easy way to stay on top of payments is to automate them or set reminders. The right strategy depends mainly on how often and regularly you’re paid. Take a look below to see what method is best for you so you can improve your credit score:

  • Payment reminders:
    It is very important to know when payments are due and to never miss payments.

  • Autopay:
    Setting up autopay will insure you do not miss any payments.

  • Micropayments:
    Another method is to set up micropayments. This means that you pay multiple times a month.

4. Only Apply for New Credit when needed.

Here are a few reasons why:

  • Hard Inquiries:
    Try to limit your hard inquiries because it tells a creditors you are actively looking for credit, which could cause them to question why.

  • Lower credit age:
    New cards lower your overall credit age. Length of credit history makes up 15 percent of your score.

  • Increased Credit:
    New accounts with fresh credit may cause you to spend unnecessarily

5. Clear Up Any Collection Accounts

Collections accounts can wreak havoc on both your credit score and your total debt. You should speak to the original creditor of the loan to see if you can come to a payment agreement through a pay for delete letter. This is a negotiation tool that asks to remove negative information from your credit report in exchange for paying off the full balance.

If the creditor agrees to these terms, you’ll need to get the agreement in writing to ensure they follow through. Keep in mind that not all creditors accept this type of arrangement, so it’s not a guaranteed fix.

6. Dispute Inaccuracies on Your Report

You should routinely check your credit reports for any inaccurate information. One in five people have an error on at least one of their credit reports according to the Federal Trade Commission, so you may have something on your report that needs attention. These inaccuracies can come up for a variety of reasons including purchases made by someone who stole your identity and misreported late payments from your lender.

Experian, TransUnion and Equifax offer one free credit report each year through Annual Credit Report. You can also receive a credit report if you’re denied by a lender or creditor. They’re required to give you a copy of the credit report and score they looked at to make their decision.

7. Lower Your Credit Utilization Ratio

The three major credit bureaus offer one free credit report each year through Annual Credit Report. You can also receive a credit report if you’re denied by a lender or creditor. They’re required to give you a copy of the credit report and score they looked at to make their decision.

A utilization of 30 percent or below is preferred by most lenders. Low utilization rates tell lenders you can successfully manage your debt and that you haven’t maxed out any of your cards. If you’re having trouble keeping your balances low, here are a few things you can do that may help your overall utilization ratio:

  • Move your due dates:
    If you have trouble paying your debts because of the due date, you can call and ask your creditor if they can change your due dates.

  • Raise your credit limit:
    An increased limit raises your available credit, thus positively impacting your credit utilization. Beware that you’re less likely to receive this if you don’t have a positive history with your creditor or have a high balance on your credit card already. This also causes a hard inquiry to show up on your credit report.

How Long Does It Take to Rebuild Your Credit Score?

The time it takes to rebuild your score depends on the types of inaccurate items on your report and the extent of your credit history. Below are some major inaccurate & negative items and the length of time they remain on your report:

  • Inquiries: Two years

  • Delinquencies: Seven years

  • Most public record items: Seven years, but some bunkruptcies can remain for 10

The most important thing to remember is that there are no shortcuts or quick fixes. You’ll need to steadily work on fixing the different factors that affect your score to eventually improve it. Consistently practicing good habits is the key to raising your score.

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