How To Repair your Credit?
The consequences of bad credit are sometimes irreparable and have a long lasting impact on your finances. Therefore, it is very important for you to repair your damaged credit as soon as possible.
The first essential step you must take to repair your credit is to order for your credit reports. It is better to get credit reports from all the three credit bureaus. Creditors usually do not report to all the three credit bureaus. They report to only that credit bureau to which they subscribe. There have been several instances when the credit reports prepared by the different credit bureaus differ from one another. Once you receive the credit reports, it is very important that you check the reports for any error.
How to repair credit depends on whether you want to deal with the creditors on your own or take professional help to do away with your credit.
What you need to repair in a credit report?
In any credit report you need to repair the following –
- If your credit report contains any incorrect information or it contains details of accounts that do not belong to you.
- Details of past accounts that are due, charged off accounts or if your account has been sent to the collection agencies.
- Accounts that have exceeded the credit limit (commonly referred to as maxed out accounts).
Once you have identified the areas which need to be addressed, the next step is how to repair credit and what are the steps that you should take.
Tips to repair your credit
You may have a damaged credit report but that does not mean you will not recover financially. There are several ways you can repair your credit. Given below are few guidelines to repair credit.
- Payment history makes up a major part of the credit score. If you have too many due accounts that are past, it negatively impacts your score. What you must do is make all the past accounts “paid” and “current”.
- The next step you can take is to reduce the number of credit cards you own. Let your creditors know about this and report the same to the credit reporting agencies.
- Avoid filing for bankruptcy. Tax liens should also be avoided. If you file for bankruptcy, it stays on the credit report for a period of 10 years.
- Send requests to the creditors so that they reduce credit limits on your existing accounts. It is better if you send the request in writing. By doing so, the credit limit you can avail gets reduced and you have less money to spend. Regularize your payments.
- Avail a secured credit card so that you can restore your credit. You can keep some money in the account so that it is enough to cover the charges.
Once you have been able to resolve the negative aspects of your credit work on the positive ones and try to get them incorporated in the credit report.