Rebuilding Credit

If one has bad credit, many closed doors may be the case for them. Did you know that a poor or bad credit score falls at below 619 on the FICO score. A 619 will result in a person not qualifying for loans, or a person might have to settle for less-than-desirable terms that cost them thousands of dollars during the loan’s terms. Not qualifying for a loan can break a business or ground it before it gets in the air.

Rebuilding credit, whether one has been through a bankruptcy or divorce, or whether they have made mistakes with their finances, doesn’t mean it has to be complicated. As long as they have patience and create a plan, they can rebuild their credit and eventually obtain an excellent credit rating.

Here are some ways one can start rebuilding their credit an

d hiking that credit score up.

Reviewing Credit Report

One should aim to always know where they are at financially. One of the best ways to know, other checking one’s mobile phone for their banking app, is by checking their credit report to see exactly where they need to improve. One can order reports directly from each of the three bureaus: Equifax, Experian, and TransUnion. There is also Credit Karma which is completely free, accurate, and just as elaborate as the three mentioned above.

It’s wise to check one’s account for errors and fraudulent accounts as well. Both can bring one’s credit score down. If something is inaccurate, dispute it, and fix the problem. If one is concerned about fraudulent accounts and identity theft, they can place a freeze on their credit to avoid further identity theft problems. Each bureau has its own procedures about how to place a credit freeze on their report by visiting the bureaus’ web sites.

Catch Up on Payments

Payment history accounts that show up as late or faulted can affect one’s credit score. If one is behind on their payments, they won’t be able to improve their credit. By catching up on all of one’s accounts that are present on their credit report, their score will go up and open accounts will stop lowering the score.

Make Payments on Time

When a person catches up on their payments, they should work hard to maintain and pay their bills on time (non-credit bills included). Missed hydro bills and late rent payments can be reported to the credit bureaus. Payment history is important as well and establishing a reliable pattern is vital to rebuilding credit. At the very least, one wants to avoid reports that they are missing payments.

Pay Down Debt

An important factor in a credit score is one’s credit utilization. Credit utilization is a measure of how much debt they have. It is expressed as a portion of the available credit one has been using. If one has a total credit availability of $10,000, and they are using $7,500 of it, their credit utilization is 75%.

If one is using a great deal of their available credit, it can count against them. Create a plan to pay down debt a little faster. Honestly evaluate expenses, and cut back wherever possible. Use the money you save to reduce debt. Try to get credit utilization down to 30% or less. If one can reduce their debt, the credit utilization portion of their score will improve, and help credit overall.

By following some of the steps above, one will be well on their way to a credit score that surpasses 700.

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