Your credit score, report and history hold a lot of power in your finances. They determine not only whether you’re approved for loans and credit cards, but the specific terms of those offers, such as your interest rate. But if you’re suffering from a bad credit score, you may find it challenging to get the money you need or want. Fortunately, there are ways to fix your credit that can help you make better financial decisions in the future.
One of the most important steps is to review your credit reports from each of the three nationwide consumer reporting agencies. You’ll want to check for errors, inaccuracies and signs of identity theft or fraud. If you do find something incorrect on your report, you can file a dispute with the credit bureaus.
Credit scores are based on many factors, with payment history making up the largest percentage of your score. Missed payments can stay on your report for up to seven years, so you’ll need to be diligent about paying on time. To help with that, try setting up auto-payments on your accounts or contacting the issuer to see if they’ll agree to forgive you a late payment (they might do this only once, though).
Another big factor is how much of your available credit you’re using at any given moment, known as credit utilization. The best way to lower this is to pay off balances before the end of the billing cycle, or to keep your balances below 30% of your total credit limit. If you have an existing credit card that you’re able to pay down, consider requesting a higher credit limit from the issuer to help reduce your utilization.
You’ll also want to avoid applying for too many new lines of credit in a short period of time, which can result in repeated hard inquiries on your report and may suggest that you’re trying to borrow more than you could reasonably repay. It’s a good idea to apply for credit cards only when you need them, such as when you’re seeking a loan or a rental property.
Once you’ve addressed negative items on your report, focus on adding positive information to your report. If you’re still struggling to improve your credit, it’s worth considering a credit repair service that can work on your behalf to help remove inaccurate information from your report. how to fix my credit score