THE FIRST THING TO DO
The first thing to do is to get a free copy of your credit report. By law you’re allowed annually one free copy of your credit report from the three major credit agencies: Experian, Equifax and TransUnion. It’s important to get all three reports from all three agencies to compare and contrast any discrepancies such as late payments, charge offs or delinquencies.
SET ASIDE SOME TIME TO REVIEW
Now that you’ve gathered all the information from the credit agencies, set aside some time to figure out where you went wrong with your credit and prepare to fix it. If there are any items on your credit report that are wrong or don’t look familiar, file a dispute in writing. Even errors such as misspelling of your name, social security number or address could mean your personal information is mixed up with someone else. The credit agencies are obligated to remove any errors in personal information, which will help increase your score. The most highly used credit score scale used by the largest banks and lenders is the FICO score and generally a score of 720 and above is considered good.
MONITOR YOUR CREDIT REPORT
One important factor to raising your credit score is to make sure you pay your bills on time. While this may not seem important, 35% of your FICO score is determined by your history of payments made – whether you were late or current with your obligations. During this time of repairing your credit, you should prohibit yourself from applying for any additional credit, which may lower your score. If you have any other credit cards you don’t use as frequently, use them to make small purchases every few months to help grow your score and pay the bill off in full. If there are any outstanding balances from other cards stop using these cards until you pay them off even if it’s the minimum amount.
SEEK A CREDIT REPAIR COMPANY
If you don’t want to repair your credit on your own, you can go through a company that specializes taking care of that task for you. Many companies advertise that they’re the best and can help you clean up your credit within a short period of time. It’s very important to do your research on various credit repair companies to avoid getting scammed. Ask friends or family about a reputable credit repair company they may have used. Be prepared to pay associated fees with such a company.
If you’re afraid to delve into the credit game after getting your credit score on the right path, obtaining some type of credit is key to rebuilding and keeping your good score intact. Look into getting a secured credit card, which is fairly easy to apply for. The good thing about a secured card is you put down a security deposit and whatever purchase is made will directly debit from the card. Managing the account properly and having this card reported to the three credit agencies will help maintain a good credit rating.
Once you get the secured card, don’t go on a spending spree and reach your card’s limit. You may have the idea in your head that swiping the card as much as possible will improve your credit score but it may look as if you’re about to max out to the credit agencies. You will want to use about 10-25% of available credit from the card to have a favorable score.