Bad Credit Fixing 101

bad credit fixing can limit the financing options available to you. It can also cost you more for rent, utilities and car insurance. Fortunately, there are many ways to improve your credit score and restore your creditworthiness. It may take a while, though. Getting a good credit score requires building a history of responsible credit behavior. In the meantime, you can work to repair errors on your credit report, pay off debt and maintain a low credit utilization rate.

A credit score is a number between 300 and 850 that lenders use to determine your likelihood of repaying money you borrow. A credit score is based on information in your credit report, which is pulled by lenders when you apply for credit cards or loans. It can vary by lender and can include factors such as your payment history, how much outstanding debt you have and the age of your accounts.

Rebuilding your credit can take time, especially if you have missed payments or defaulted on a loan. Negative marks such as these can remain on your credit report for up to seven years, but you can work to raise your score by paying off debts and demonstrating responsible spending habits.

You should also resist the urge to open new credit. Each new application triggers a hard inquiry, which reduces your credit score by a few points. This is why you should aim to keep your credit card balances below 30% of your total credit line.

If you’re having trouble making your credit card payments, you should seek a credit counselor for help. A credit counselor can explain the importance of good credit and provide you with tools to establish responsible credit behaviors. They can also offer budgeting tips and suggest ways to get out of debt quickly.

When attempting to repair your credit, you should be wary of any company that claims it can instantly clean up your credit. The process of correcting erroneous information on your credit reports can be labor intensive and time consuming.

The best way to dispute incorrect information on your credit report is by sending a letter with documentation to each of the three major credit reporting agencies. The Federal Trade Commission has an example of a credit dispute letter to help you get started.

In addition to paying your bills on time, you should try to make all other debt and bill payments on time as well. This includes not only credit card and loan payments but also utility, cable and cell phone bills. Getting behind on these types of payments can impact your credit as well, even if the organizations that report to the bureaus don’t report late payments to the credit bureaus.

The final step in repairing your credit is to stay away from applying for new credit or loans. This can be difficult, but it’s important to do so if you want to see your credit scores increase. Lenders and creditors want to see that you can manage debt responsibly and don’t need more credit to survive.

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