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Best Ways To Repair Your Credit Score

Hand putting check mark with green marker on excellent credit score evaluation form.

No matter what the reason for your poor credit score like too many late payments or a financial crisis, you need to repair your credit score. Without a good credit score, your loan applications get turned down and you end up with high credit card rates. So if you need help rebuilding your credit score, here are the best ways you can repair it.

  • You need to first know how poor your credit score to fix it. Get a credit report from the major credit reporting bureaus and compare them. If there are some scores which are very different from the others, there’s an error holding you back, which has to be reported.

Send a letter describing the error to the credit reporting bureau, with copies of any supporting documents. The bureau has 30 days to confirm the disputed error failing which the error is deleted.

If all reports are similar, late payments are most probably the culprit for your low score. If this is the case, contact the creditor for a payment plan and if you have a dispute with the creditor, explain your side of the story through a note to the credit report.

  • Next, pay all bills on time. This is very important to repair your credit score. You could set automatic payments on your bank’s online bill-paying system. As insufficient funds to cover the automatic payment may hamper your credit score, make sure your account always has a cushion to cover these payments. If you can’t pay all your bills on time, at least reduce the blow by defaulting on only one, perhaps highest monthly payment.
  • Next, avoid frequent use of credit cards as credit card payments figure 30% of your credit score. Ideally, spend only 10-20% of your available credit limits wherein you are offered the best interest rates. It’s however better showing you can handle credit wisely through occasional balances on your credit cards instead of not using any credit at all as it proves you can use credit well.
  • Shift your credit card balance to a card with 0% interest. This way you end up with lower interest rates as long as there’s 0% interest on the card’s amount. Consequently, you can pay more and clear off your debt as soon as possible.
  • Another option is to get a debt consolidation loan where all your debt is merged into one single loan. The benefit here is there is only one person you are answerable to every month, and only one payment to make.

This single payment works out cheaper than the combined monthly payments of individual debt amounts. With a lower and cheaper payment to make, the chances of your clearing your debt are higher, which in turn helps you quickly repair your credit score.

These are the best ways to repair your credit score. Don’t expect miracles overnight. You need patience and perseverance wherein you slowly but surely find your credit score improving.

5 Ways to Spot Credit Repair Scam

dwihts effort 1

Do you a bad credit that needs to be repaired quickly? Being desperate for better credit can leave you vulnerable to credit repair scams. Don’t let yourself be taken advantage of. Here are five ways to tell if a credit repair scam service is trying to make you a victim.

1. You are kept in the dark about your legal right.
All legitimate companies that offer credit repair services operate under a set of laws known as the credit repair organization act. These companies are supposed to issue their clients with a copy of consumer credit file rights under state and federal law. This document informs the consumers their rights to obtain a credit report and dispute inaccurate credit information.

If you are not issued with this document, think twice about letting such a company repair your credit. In fact, think thrice and all these thoughts should be NO!

2. You are asked to create a different credit identity

It is never ok to impersonate or give wrong information about your identity. This may get you in trouble with the state laws. If any credit repair company is requiring you to fake your identity, be sure that it is not a legitimate company. It should be reported Federal Trade Commission.

3. You are not issued with a contract, or an incomplete contract is issued. If you don’t receive any contract from a company you signed on to get services from, this is scam! A genuine contract should contain the following: a) Amount to be charged b) The name and address of the credit repair company c) Details about the service which will be performed d) The date by which these services will be performed e) A statement to let you know that you can cancel the contract within three days if you are not comfortable with it.

4. The company offers to perform illegal services

Some credit repair companies make shady claims that they can help you remove unfavourable but accurately reported information from your credit report. Not only can they do this, but attempting to do so is wrong. You may end up in problem with the state laws. Still, you will be wasting money for a service you will never get.

5. The company requires payment before service

It is against the law to require any payment before any service is delivered to you. Genuine credit repair companies will always let you know the means of payment, and also the payment will be done on completion of the service.

If you identify any of the five signs of a credit repair scam, please don’t sign a contract with such a company. If you already have signed one, consider cancelling it.