Credit Repairs |
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For those hoping to repair their bad credit, there are many ways to improve a bad credit score. Many of the steps toward improving bad credit can be done yourself. There are also thousands of credit repair companies. Some of these companies are more legitimate than others however, and some make promises to repair your credit that they cannot keep. Whether you choose to pay a company to do it or to do it yourself, the first step toward credit repairs is to obtain a copy of your credit report. Check the report for errors (most of them will have at least one) that could be affecting your score. Things to look for on the report include: payments showing as late which were paid on time, accounts showing a balance which should show paid off, and other bad marks against your credit which should have come off the report after seven years. The easiest and most helpful way toward credit repair is to make sure to always pay your bills on time. Make sure that you always find a way to pay at least the minimum amount due. It may take a while to build your credit back, but every consistent on-time payment will improve your score, just as each late payment hurt it. Some who have had major credit problems in the past may be tempted to stop using their credit cards altogether. However, concerning credit repair, this is not a good way to improve. The important thing is to show lenders that you have learned to use credit responsibly. If you have a number of maxed out credit cards, your first priority should be to start reducing your balance on each card. Reducing the balance to 3/4 of your available credit is a good first step toward obtaining a good balance between your existing balance and available credit. Known by lenders as the "utilization ratio," the percentage of balance to available credit is very important. Lenders like this ratio to be between twenty and thirty percent, but as long as you are making progress on decreasing your percentage, the lenders will likely take notice. When attempting credit repair, avoid applying for new credit. This can make you look like you are going to run up debt and also lower the overall age of your credit history. Sometimes, having too many inactive accounts can look bad to your credit history. However, you must consider your utilization ratio in this case. To most lenders, it is better to have more credit cards with lower ratios than fewer cards that are almost maxed out. Also, be careful of which accounts you close. Closing an old account and keeping newer accounts will lower the age of your credit history, making you look like a new borrower, which will negatively affect your credit score. Check your credit reports again, however, after closing any accounts to make sure that they were reported as "closed by consumer." When attempting your own credit repair, it is very important to show stability. |
