I want to fix my credit: where do I start?
Do you say to yourself or to friends, “I want to fix my credit,” but, you’re a little flummoxed on where to begin? You’re not alone. Until very recently, a lot of the mechanics of credit scores were kept hidden from the public view. But, more open credit reporting laws mean that it is far easier to find out what parts of your credit can use some improvement and what actions will have the largest effect.
Get Your Credit Report
The three credit reporting agencies are required to give you your credit report free on request once a year. If you’ve already accessed your report, you can still get it for a small fee. You can also access a less detailed version for free on sites like http://privacyguard.com
Check over your credit report, paying close attention to any negative marks. Look over all three reports, as different reports may reflect different information.
Challenge Inaccuracies, Fix Legitimate Bad Marks
Sometimes, items that should be shown as charged off during a bankruptcy will still appear on your report. In other cases, bills that you paid may still show as open. In still others, your credit report might reflect dollar amounts that are not accurate. Challenge the legitimacy of these marks; creditors must verify them within 30 days if they are to remain on your accounts.
For the debts that you legitimately owe, begin negotiating payment. You may be able to work out installments, or even having a partial payment count as paying the debt in full.
Start Applying for New Credit
As you work to resolve negative records, begin building positive ones. If you have bad credit, you will probably need to start the credit repair process with secured debt. Save money that you can use as a security deposit on a credit card or loan. By getting a card, you can begin showing potential creditors that you can be trusted with debt.
Pay On Time, All the Time
Starting with your new secured card, charge a small amount each month and pay it off in full every month. Don’t spend extra in order to use the card; instead, reallocate a bit of your monthly spending so that you use it. For instance, instead of reaching for your debt card at the grocery store, grab the credit card instead.
Then, pay each credit card bill that comes in on the same day every month. It’s best to pay in full so that you don’t wind up paying interest charges. If you think that you might have trouble remembering to pay, try automating the bill. Most credit card companies will allow you to set up automatic payments for either the minimum payment or the full statement balance.
After a period of time of responsible use, you will see the three digits in your credit rating start to climb, and you’ll be able to cross “fix my credit” off your personal to-do list.
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