Lots of people live with a damaged credit score but don’t really understand how they can restore it. Most people believe their credit score is largely reliant on making all their payments on time. Yet they don’t realize there are a number of other factors that could be dragging their score down.
Here are some tips for getting your good credit score back for good.
Check Your Credit Report
The information on your credit report is entered by your creditors and listed by various credit reporting agencies. However, it’s possible for some creditors to enter information incorrectly.
For example, a person with a similar name to yours may have missed several payments and the creditor may have submitted the information to be entered onto your report instead of theirs. Likewise, you may have caught up all your past due bills and your creditors may not have reported the information yet.
Before you start taking any steps to repair bad credit, take the time to check what’s listed on your credit report first. If you notice any mistakes, get them cleared up at once. You could also contact this credit repair company to see if they’re able to offer some further advice about fixing mistakes on your report.
Catch Up Past Due Payments
A whopping 35% of your credit score is based on your level of financial responsibility. If you’re consistently late with payments, chances are your credit score has been negatively affected.
Work on ways to catch up any past due payments you have outstanding. Then focus on being on time with future payments. Set up automatic direct debit payments for some smaller recurring bills, such as Netflix subscriptions or utility bills and always ensure you have sufficient funds sitting in your account each month to cover those expenses.
Reduce Outstanding Balances
Your credit utilization ratio can account for 30% of your credit score and takes into account the amount of credit you’ve used as compared to the amount available. For example, if you have a $5,000 credit card limit and you owe $4,900, you could find your score is affected because of your high credit utilization ratio.
Work on reducing your outstanding debt balances on any credit cards or other types of revolving credit. Not only will your interest charges reduce, saving you money each month, but your credit score will benefit at the same time.
Avoid Credit Repair Scams
When your credit score has been damaged, it can sometimes feel easier to ask for help from a credit repair company. While there are lots of legitimate companies around willing to help you fix bad credit, there are also some scams circulating.
Before you agree to anything, always take the time to check that you’re dealing with a reputable company. Check with the Federal Trade Commission that you’re not being sucked into a scam before signing any documents or paying any money.
Restoring a good credit score can sometimes be a time-consuming process, However, once you start working on ways to fix a bad credit score, you should also notice it becomes much easier to regain control over your financial situation.