How to Fix your Credit

If it ever happens that you are declined when you apply for a credit card or loan the alarm bells should alert you to the fact that your credit score has most likely plummeted. This is not a good thing as beyond not receiving the loan or shiny plastic, your credit score has many other influences on your day to day life. Potential employers may check it, as may landlords and insurance companies. Without a good Fico score you could end up paying higher car insurance premiums despite an unblemished driving record, or losing the job you really had been hoping for. Things need fixing.

The first thing to do is obtain your annual free copy of your credit file to see exactly where things have gone wrong. If there are any errors showing, you can expect them to be corrected within 30 days.

Never be tempted to fall into the hands of companies who promise a quick fix to your credit problems as it can’t be done, and they do nothing for you that you can’t do for yourself with a bit of online research. They will however enjoy taking your fee. Such intervention can be looked upon in a bad light by credit issuers who prefer to advance credit to people who can demonstrate personal responsibility over their finances.

Having a bad credit score does not mean you can’t actually get credit, as there are many sub prime lenders waiting to take advantage of your situation and sell you a credit card with fees of up to one quarter of the credit limit they extend you. Ironically, one of the best ways to go about fixing your credit is to obtain more of it.

You can then demonstrate how responsibly you can use it, by always paying on time and never exceeding your credit limit. By building a pattern of regular small spending on a credit card which is then paid on time, you should be able to increase your score by about 100 points over the course of a year.

You will not be able to obtain the best type of credit card if your score is in need of fixing, but check online to weed out the worst. Be sure that any card you sign up for reports to all three of the major credit bureaus, as if they don’t they will do nothing to repair your score.

You could also consider a secured credit card which is a good way to build up your credit. They have annual charges to pay and don’t come cheap, but that is the price for having bad credit. The fact that you need to be able to put down a security deposit on the card demonstrates that you are committed. They don’t need to be a long term tool, as usually, if handled well, allow you to move onto an unsecured card within a year.

Another option to fixing your credit is to sign up with a company called PRBC, who will register your normal bill payments for things such as utilities, rental and day care. You can establish a pattern of payments which may also help to improve your Fico score as the two companies have now started working together through the Fico expansion score. The service does not need to cost you anything if you start to register your payments from today, as it is the potential lenders who pay to access the file.

Always remember that if you do use credit to improve your credit, you are being given a second opportunity to put things right, and be sure to abide by all the terms and conditions you sign for. Never be tempted to skip through agreements without going over them with a magnifying glass so you don’t get caught out with hidden clauses. If you do mess up a second opportunity remember that your activity is still being reported to the credit bureaus, and after this chance you may only have the choice of the worst sub prime lenders to turn to.