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.