It’s no secret that your credit score plays a big role in attaining the material assets you want at a price you want. Your credit score is your ticket to a good interest rate on a car loan, a mortgage and even on credit cards. If you have poor credit, however, to repair credit score is not as hard as you may think or may have been lead to believe—as long as you follow a few simple steps.
The first step in repairing your credit (actually what you’re doing is repair your credit report) is to get your hands on a copy of one or more of your credit reports from any or all of the three major credit bureaus: Experian (www.experian.com), TransUnion (www.transunion.com) or Equifax (www.equifax.com). If your credit score is 650 or above, you’re likely going to have little trouble getting approved for credit – and at a good rate. A credit score of less than 620 means you’re going to need to start repairing your credit.
Do you want to know how to repair credit without spending your hard-earned money? If so, then keep reading, it’s not rocket science!
Now that you know what your credit score is, study your credit report to ensure there are no errors. Make sure your personal information, such as name and address, are listed correctly. Also look for any accounts listed as open that may actually be closed. If you’ve closed an account, make sure it is listed as “closed by consumer.” If you’ve filed for Chapter 7 bankruptcy, is it listed as such? Any bankruptcies ten years or older and any information seven years or older should not appear on your credit report. Finally, are there any accounts or law suits listed on your credit report that don’t belong to you?
Errors can have an adverse affect on your credit score. Therefore, if you find any errors on your credit report, you want to inform the credit bureaus immediately by sending them a letter. If you do not receive a response within 30 days, follow up. The longer the errors remain on your credit report, the longer your credit score is going to suffer.
Establish new credit. One way to improve your credit score is to maintain good credit by opening a savings or checking account at a bank or a credit union. Being able to responsibly maintain a savings or checking account shows the bank you are able to handle your money. Consistently paying your bills on time, out of this account, will help raise your credit score.
Another way to raise your credit score to the 650 range or higher is to get a credit card, a gas card or a store credit card. Every month, use the card to purchase items you would normally purchase with cash. At the end of the month, pay off the balance. This is the important part. If you don’t pay off the balance, it will make things worse! Before you start using a store or gas credit car, make sure the company reports your activity to the credit bureaus. If they don’t, then there’s really little point in using that particular card, considering your goal is to have the information transmitted to the credit bureaus to boost your credit score.
Always pay on time. Your credit score is going to continue to suffer if you do not pay your bills on time every month.
Stick to a budget. The thought of sticking to a budget makes plenty of people cringe, but it’s essential if you want to repair your credit score. Make sure you always have enough money to cover your bills each month. Cut back on luxuries such as premium cable, dining out and vacations. Instead of purchasing books, magazines, CDs and films, take them out of your local library. Clip coupons and buy generic instead of brand names. Never impulse shop. You’ll be surprised at how easy it is to stick to a budget and how much of a positive effect it’s going to have on your credit score.
All in all, repairing your credit score is actually pretty simple if you commit to it. Just remember, your credit score is your ticket to getting what you want – repairing it is possible, repairing mistakes is legal and beneficial to your financial health, so don’t give up.