Having bad credit can prevent you from renting an apartment, purchasing a home and may even be a deciding factor in whether you are able to get the job of your dreams. There is no quick fix to bad credit, you have to work on repairing your credit using approved methods. The Fair Credit Reporting Act (FCRA) makes your credit report available to you one time annually for no charge. All three credit reports from each of the individual reporting agencies (Equifax, Experian and Transunion) can be ordered online free of charge.
Once you have received your credit reports you should examine all three of them carefully for any errors. Any errors should be reported immediately by filing a dispute with the agency that is reporting it. You should also contact the company that is reporting the erroneous information. Be sure to include any backup documentation that substantiates your claim of an error.
Focus on Repair
Once you have determined that all entries are accurate on your credit reports, it is time to start dealing with the reality that your credit score is not as high as you would like it to be. You can work towards repairing your credit by taking these simple steps:
Paying off larger balances – Your first priority should be paying off credit cards and non-mortgage loans that have high balances. This must be done while making other credit card payments and your mortgage payments on time.
Paying on time – Avoid making any late payments while you are trying to repair your credit. Any late payments will count against you and reduce your credit score. Even a thirty day late payment can have a detrimental effect on your credit score.
Avoid new accounts – Do not open any new credit accounts when you are trying to repair your credit. Remember, the more debt you have, the lower your credit score will be.
Avoid transferring balances – Do not transfer your credit card debt from one card to another. This will not help you repair your credit.
After Working on Repair
Request another copy of your credit report. The free credit report only covers one report a year, so if you have been working for less than one year on the repair phase, you may be required to pay a fee for your report. Pricing varies between credit reporting agencies and will also be higher if you are requesting your credit score with them.
Repairing your credit is a systematic process that requires diligence on your part. While you should carefully review all credit reports for errors, you should also make a commitment to improving your overall credit score. If you have aging debt, make sure you know your states regulations regarding last payments. Some states have policies that allow you to have items removed from your credit report after they have been there for a specific number of years. Credit collection agencies do not want you to know this information so make sure you protect yourself.