Top 9 tips to fix your credit yourself

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Top 9 tips to fix your credit yourself

Having a good credit report is vital as it directly influences your credit score. If you don’t have a good credit score, you won’t be able to get a loan. Even if you manage to get a loan, the interest rate will be very high. So, you will end up paying thousands of dollars more than someone with a good credit score. People often make stupid mistakes that make their credit scores go down, like missing mortgage payments or paying their bills late. These must be avoided. You must always maintain an average credit score and try to improve it. If your credit score is below average, you must fix it. Many people go to a credit repair service provider to fix their credit. But most of them don’t know that you can take the necessary steps yourself without going to a credit repair service. It is expensive to hire such a company. So, if your credit report is poor and you want to improve it, try doing it yourself. Here are some tips how to do it.

Analyze your credit report

You should check your credit report from the three credit reporting agencies. You can get help online on how to read your credit report. If you find that any of the information is incorrect, you can file a dispute. If you don’t recognize any of the items in your credit report you should ask an expert about it. Someone may be trying to get credit in your name and so you might see some unrecognizable items on your credit report. These items can be fraudulent. For example, if you haven’t made any late payment but notice such payment in your report then you will know that something is wrong. Also, if you see a huge balance on your card that you have not used, then you should report to the credit reporting agency immediately. You should check everything in your credit report thoroughly.

See how you can improve the payment history

If you have any late or missed payments, it can affect your credit score. This record will stay on your credit report for 7 to 10 years. If you have a huge amount of debt and have missed payments recently, then it will have a great impact on your credit score. You should try to make payments on time to improve this score.

Learn about Credit Utilization Rate

Credit utilization ratio is the amount you owe to the amount of credit you have available. That is, it is the balance-to-limit ratio. If you have high credit utilization rate, then it can affect your credit score. So, as a rule of thumb, you must keep this ratio below 30% always. You should pay your debts on time and try to increase your credit limit to achieve a good credit utilization rate. However, there is a drawback to increasing your credit limit. You might be more tempted to use the credit and get into more debt. So, you should control your spending habit.

Don’t apply for too many credits at a time

If you open too many credit accounts within a short time, the lenders will consider you as a risky client. It might affect your credit score negatively. So, before you apply for any new credit card, you should think about the effect it will have on your credit report.

Keep credit accounts open

Suppose, you have multiple credit accounts and you have paid off some of the accounts in full. In such case, don’t close those accounts. Keep them and it will have a positive impact on your credit score. If you have a long credit history, your credit report will be good. Keeping those accounts that you have paid off will show a long credit history. Even if you have some credit cards that are unused, keep the account open; it will contribute to your credit history.

Make your account separate after divorce

During a marriage, you might have a joint credit card or loans that you have con-signed with your spouse. Your spouses’ credit score will have an impact on your credit report. So, after a divorce, you both should try to pay off the balance and close the account or get one person’s name removed from the account.

Don’t allow excess inquiries

When you apply for a loan, the potential creditor contacts your credit reporting agencies to know about your credit history. The inquiry made is added to the credit report and the record stays there for two years. If you do a number of inquiries within a short period of time, your credit score will come down drastically. However, when you are trying to get a car loan or mortgage, your inquiries won’t affect your credit report for a 30 to 45-day period. All inquiries will be considered as a single inquiry in this case.

Don’t consolidate balances to one card

Though it is a good option if you have too many high interest credit cards, it will significantly affect your credit report. So, try not to consolidate your debts.

Try not to file for a bankruptcy

Filing a bankruptcy can hurt your credit report significantly. For up to ten years, the record will stay on your credit report. Bankruptcy doesn’t make you free from your financial responsibilities. You won’t be able to fix your credit easily and you won’t get any mortgage or other loans.

Using these tips you will be able to improve your credit report; however, it might take up to 12 months to see any significant change in your credit score. You don’t need to go to a credit repair firm to improve your credit report; you can do it yourself by implementing some of the strategies just mentioned. You should be cautious about credit repair firm that provides 100% guarantee to improve your credit score. No one can guarantee it. So, take out your credit report and study it thoroughly to find out ways to improve your credit score yourself.

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