Tag Archives: credit repair

5 Techniques to Enhance Your Credit Score and Gain Access to Better Loans

In order to be eligible for a loan, you must demonstrate that you can repay the debt to the lender. This is typically evaluated by inspecting your credit report from a Credit Bureau. This report provides the lender with the necessary information to build a thorough profile of your credit risk.

Lenders will use the information gained to see how much you qualify for and if you will be accepted for a loan amount. Various elements are taken into consideration when deciding your credit limit and loan approval. The criteria that creditors utilize to assess your borrowing capacity are referred to as the 5 Cs of Credit.

If you can master any of these five elements, then you will be in a better position to qualify for higher loans.

The 5 Cs of Credit

The 5 Cs of Credit are a set of criteria that are used to assess the creditworthiness of an individual. Understanding these 5 Cs is essential for obtaining the best possible loan terms.

When someone applies for a loan, banks and other lending institutions use the 5 Cs of credit to evaluate the borrower’s creditworthiness and overall financial situation. This system allows lenders to take into account factors such as the applicant’s ability to repay the loan, their credit background, and the risk linked with the loan request.

The 5 C’s are: Character, Capacity, Capital, Collateral, and Conditions.

Let us examine each of these aspects in more detail and explore why they are significant.

  1. Character: This is evaluated by checking the borrower’s payments and credit behavior. Loan providers will look into the applicant’s credit report, including any payments made and debts owed.
  2. Capacity: This involves the ability to pay back a loan you have requested. Lenders will investigate the amount of money coming in to make sure it is enough to handle the debt. In the event that the income is too low, the borrower may be deemed a risky choice.
  3. Capital: This is linked to the borrower’s net worth or assets. Loan providers will assess their financial situation to make sure they have enough assets to cover the loan in the event of non-payment. If the applicant holds any relevant investments, they may be seen as a less risky option.
  4. Collateral: This is the value of the assets that the borrower can put forward as security for the loan. Lenders will typically ask for collateral to reduce their risk in the case of a default. The value of the collateral will be analyzed to make sure it is adequate to cover the loan.
  5. Conditions: This is in reference to the borrower’s financial situation and the state of the economy. Loan providers will look at the borrower’s industry, the economic landscape, and other factors which may affect their ability to repay the loan.

How To Improve Your 5 Cs of Credit

Change Your Habits

Your credit report serves as a record of your financial conduct, which lenders assess in order to determine if you are reliable enough to grant a loan. If you are guilty of misusing loans, defaulting, or making late repayments, it’s time to make a change. Let’s break down 3 strategies that will increase your likelihood of loan acceptance:

  • Ensure your loan repayments are on time to show lenders that you meet your loan obligations punctually and in full. They are more likely to trust you if you do this.
  • Update your credit report regularly and get a clearance certificate once you have cleared all your loans.
  • Stay away from practices that promote bad credit like exceeding your credit limit or becoming overly reliant on loans. When dealing with credit cards, ensure you pay your bill on time, and if you can’t, at least pay the minimum amount. Furthermore, stay away from tactics like co-signing for somebody with a low credit score or taking out numerous loans at once.

Work on Improving Loan Repayment Capability

When trying to raise your credit, demonstrate to a loan provider that you are capable of settling a loan. They will take into consideration your wages, current debts, and salary to evaluate your credit capacity. Do you have a job that is likely to provide enough money to make loan payments? Are you self-employed?

Improve your capacity in the following ways:

  • Reduce Your DTI: This is the rate of your monthly income that goes toward repaying debts. The lower your DTI, the better your credit capacity. Therefore, work on increasing your earnings and paying off any outstanding debts to reduce your DTI.
  • Have Multiple Streams of Income: Are you self-employed or employed in a job that does not provide secure income? Consider multiple income streams like rental income, freelance work, or a part-time job. By exhibiting steadiness in your income, you can improve your credit capacity and raise your chances of getting approved for a loan.

Grow Your Capital

Your financial standing is what one would refer to as capital. It indicates what available assets you have that are not currently pledged to a debt. Lenders will want to be assured that you have assets such as real estate, property, investments, or money in the bank to use as collateral when you don’t have sufficient income.

What would happen if you no longer had the means to make loan payments?

Loan providers take into consideration your capital when evaluating your creditworthiness, however, it is not given to them as collateral for the loan.

In order to grow your capital, it is advisable to:

  • Set up an Emergency Fund to serve as your financial standing: Setting aside a portion of your income in a savings account for emergency use can help you avoid difficulties if unexpected expenses or financial hardships arise. This can be a safeguard against defaulting on loans or credit payments, which can have an adverse effect on your capital.
  • Be prepared to liquidate your assets: Have a ready stock of assets that can easily be converted to cash. This can be resources or other investments that you can sell in a hurry. Holding these assets allows you to display to loan providers that you have a strong economic base and are less likely to fail to make payments.

Strengthen Your Security

When a loan is taken out, collateral can be put up by the borrower to guarantee repayment. It is essential to be aware of any available collateral, especially for secured lenders. If a person has a poor credit score or financial capacity, collateral can be a helpful resource to obtain a loan.

However, in order to be accepted as a form of collateral, the lender must set their own threshold. The loan-to-value (LTV) ratio must be satisfactory for the lender.

The manner in which you enhance your collateral will be dependent on the type of collateral you possess. When you are looking to borrow with external collateral, such as for personal loans, mortgage refinance, and logbook loans, there are three ways to increase your Loan-to-Value ratio. These include:

  • Improve the worth of your collateral: If you would like to use your house as a form of security, you can make investments in renovations to lift its market value before seeking a loan from a lender.
  • Lower your debt-to-collateral ratio: Creditors focus on the amount of debt you have compared to the collateral. For instance, if you have an existing debt on your house, the ratio can be quite high as you will have less equity. Therefore, it may be difficult to acquire a larger loan.
  • Obtain a co-signer: This individual can help you qualify for a more substantial loan by using their own assets as a form of security.

Enhance Borrowing Conditions

When compared to the other 5 Cs of Credit, conditions are much more expansive. Prior to providing you with a loan, lenders will take into account factors which you have no control over. They may examine the current economic climate and the systematic risks that come with it, such as currency or interest rate risks.

In order to enhance the last C on your credit report when you take out a loan, here are some tips:

  • Have a clear goal: Loan providers want to be sure that you will be using the money for a valid reason and that you have a plan to repay it. Whether you’re establishing a business, funding your education, or making a large purchase, having a clear goal in mind for the loan can increase your chances of your loan being approved.
  • Grow your assets: Think about any resources you can use as security, such as real estate, vehicles, or investments accounts. Having these assets in your portfolio allows you to use them when you need to take out a loan.
  • Time your borrowing: The economic environment can have an effect on lending conditions, and lenders take this into account when looking at your loan application. When interest rates are low, it might be a good idea to borrow, as you may be able to get a lower rate. On the other hand, if the economy is facing a recession or high systematic risk, lenders may be extra cautious when giving out loans. Consider timing your borrowing so that you can take advantage of favorable economic conditions.

Benefits of High Credit Scores

  1. You will get lower interest rates and more attractive loan terms. This can save you thousands of shillings throughout the loan’s lifetime.
  2. You get a shorter and faster loan application process.
  3. You might be hired by an employer easily as higher credit scores demonstrate financial integrity.
  4. It increases your negotiating power with lenders. Enabling you to choose the best loan terms as most lenders will be competing to do business with you.

CONCLUSION

It is important to note that it takes sustained hard work to boost credit scores; this means keeping up with solid financial practices and handling debt reasonably. The 5 Cs can be a beginning point, but they are not the only elements a lender will look at. 

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

4 Tricks to Boost Your Credit Score Fast

Having a good credit score helps you get lower interest rates on loans and credit cards. However, raising your credit score overnight is not always simple. You must first determine why your credit score is low before you can improve it.

Jim Triggs, president and CEO of nonprofit credit counselling firm Money Management International, Inc (MMI), tells CNBC Select that understanding the specific factors affecting your credit score is the first step towards raising it quickly. Here are some tips and tricks from Triggs and two other experts on how fast your credit score can rise and how to make it happen.

Reduce your outstanding credit card balances.

Paying more than your minimum payment each month, if you can, is a great way to chip away at your revolving debt and maintain a low credit utilization rate. Keeping your credit utilization rate low is particularly critical if you have a lot of revolving debt.

Seeing the impact on your credit score depends on how quickly creditors report the fulfilled balance on the consumer’s credit report, says Triggs. “Some creditors report immediately after the payment, while others report at a particular time each month,” she says. Credit card companies usually report your statement balance to the credit bureaus monthly, but this may vary depending on your issuer. You may call or chat online with your issuer to find out when they report balances to the bureaus.

It is better to pay off your balance each month as soon as possible. You may also make multiple payments towards your balance throughout the month to keep track of your expenditures, which makes it easier. Although it’s good  to pay even a portion of your debt off, paying off the entire amount will have the greatest and fastest impact on your credit score.

Increase your credit limit.

There are two ways to increase your credit limit: you may either ask for an increase on your current credit card or open a new one. The lower your credit utilization rate is (assuming you do not max out your card each month), the higher your overall available credit limit is. Credit utilization is the amount of credit being used relative to the amount of credit available. Before requesting an increase in your credit limit, ensure that you will not be tempted to spend more than you can afford.

Before you apply for a new credit card, do your research. Your credit score is determined by the number of times you apply for and open accounts. Every application requires the credit card issuer or lender to pull your credit report, which results in a hard inquiry and dings your credit score a few points. And be careful not to apply for too many credit cards in a short amount of time, as this may send a red flag to issuers. Issuers may have stricter terms and requirements because of the economic fallout from the coronavirus. 

There are some credit cards available for those with poor credit, but most of the top reward cards require excellent credit. The Petal 2 “Cash Back, No Fees” Visa Credit Card has no fees whatsoever, and allows applicants with no credit history to apply.

Make sure your credit report is error-free.

Checking your credit report for any errors that could be negatively impacting you can help you increase your credit score quickly. If you are able to dispute them with proof and have them removed, your score may improve.

It is important to take the time to review your credit report, as about 25% of Americans have an error on theirs. Fraudulent or duplicated accounts, as well as misreported payments, are some of the most common mistakes to look for.

According to financial educator Thomas Nitzsche at MMI, most of the clients they meet with have not reviewed their report in the last year, and are often surprised by what they find and want us to discuss with them. By going to AnnualCreditReport.com now, you can get a free credit report from the three major credit bureaus (Experian, Equifax, and TransUnion).

Request that the negative entries on your credit report be removed.

Having a lot of late payments on your credit report or an old collection account that has since been paid off showing up may be the problem. Ask to have them removed if this is the case. (And if you do have an unpaid collection account, make it a priority. Unpaid collection accounts can have a negative impact on your score.)

It may take longer and require more effort on your part, but it is worth it. Triggs recommends contacting the collection agency, debt buyer, or original creditor (depending on who currently services your account) to have a paid-off account removed from your credit report. 

It might be best to request for the account to be removed entirely, rather than just showing as paid, as this would have a more significant impact on your credit score, Triggs says. Unpaid collection account or unpaid charge-off on your credit report might prevent creditors from granting you future credit.

Doing this on your own might be overwhelming and stressful at times. You can use a credit repair company to help you out. They know the federal laws and they take charge on your behalf helping you resolve the issues you might have. 

Wrapping up

There is no one solution that fits all when it comes to improving your credit score, but you can immediately take these four steps to clean up your credit report. According to Equifax global consumer solutions president Beverly Anderson, every person’s credit journey is unique. There are many factors that affect credit scores for the majority of consumers, but they will not always have the same impact.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

How to Choose the Best Credit Repair Company in 2023

Having a great credit score is one of the most significant financial goals that everyone should hope to attain. It’s the key to having a healthy financial future and qualifying for affordable rates on various types of loans. Today, we’ll not only look at how a credit repair company can help you get back to a great FICO score again, but also how to pick the best credit repair company for you.

People can enlist the help of credit repair companies to fix their credit scores. They evaluate credit reports to identify inaccurate, unfair, or groundless data, and they make requests on your behalf for such information to be changed or removed.

While you can do these things for yourself, many people prefer to let a professional handle it, as it can be a tedious and stressful process. Credit repair firms aren’t all the same. They utilize different methods and have different pricing schemes, so it is wise to do ample research before selecting one.

What to Know Before Paying a Credit Repair Company.

Credit repair companies locate and correct any issues that may be damaging your credit scores. You may also repair your credit for free if you want to. This in-depth guide will explain how credit repair works and the advantages and disadvantages of using the best credit repair company.

Credit repair companies try to eliminate incorrect or unverifiable information from a consumer’s credit report. Keep in mind that credit repair companies that attempt to remove accurate information are unethical. Legitimate credit repair companies will only attempt to eliminate inaccurate or unverifiable information from a client’s credit report.

How to Select a Credit Repair Company

It is important to look for several telltale signs that help you distinguish between reputable credit repair companies and the many fly-by-night firms. You should look for an organization with a legal team that is licensed and has been in business for a long time.

In addition, reputable organizations offer more than just credit repair. They should also provide you with free credit reports, credit counseling, and strategies for maintaining good credit. Working hard to reestablish good credit is useless if you don’t know how to maintain it. There are too many dishonest companies out there today that collect monthly fees but are slow to address your concerns. You should therefore make sure that you are being updated on the progress of your credit repair on a regular basis once you have chosen a firm.

The best credit repair companies provide users with an online dashboard that shows their credit scores and tracks their progress. Additionally, it is wise to keep tabs on all three credit bureaus whether or not you employ a credit repair company. Doing so protects you from deception and is an invaluable aid in restoring your credit.

How Does a Credit Repair Company Work?

Legal credit repair companies assist you in removing inaccurate, false, and unsubstantiated negative items from your credit report. Avoid credit services that claim they can remove accurate but negative items from your credit repair. You are probably dealing with a scam that could negatively impact your credit score rather than improve it. It’s worth noting that reputable credit repair companies won’t promise to remove negative items or raise your credit score.

Credit reports are managed by credit bureaus, and they don’t give credit repair companies any special treatment when it comes to correcting errors. Repairing errors should take the same amount of time, whether you do it or a company does it. Credit repair companies that advise you to refrain from contacting credit bureaus are to be avoided.

However, credit repair companies offer speed and convenience when preparing documentation and communicating with creditors and credit bureaus. In addition, they go a step further and provide credit counseling and preparing of goodwill and cease-and-desist letters when required.

How Credit Repair Companies Assist You to Improve Your Credit Score

Would you like to pay a reasonable monthly fee to have a credit repair company help you clean up your credit history? If so, you may want to start with a free credit consultation with a credit expert to get the ball rolling.

After the consult, if you’re interested, you can sign up for a monthly subscription. The most common credit repair services are:

  • Summarizing and examining credit reports.
  • Communicating with credit bureaus and creditors by sending dispute letters on your behalf. 
  • Following up on the disputes until they’re resolved. 
  • Equipping you with financial tools and educational resources to ensure you can manage your own credit and finances. 

What Issues Can Hurt Your Credit Score?

Working with the best credit repair company will help you identify issues that could be damaging your credit history when they check your credit reports. These things include:

  • Inaccurate information: These are simple things to eliminate from your report, like spelling errors or incorrect amounts. 
  • Outdated items: the truth is that negative items can’t be recorded on your credit report forever. They have to be removed after a specific period of time. Take, for instance, hard inquiries—they can only be listed for a period of 24 months. 
  • Items with no evidence to back them up: If something on a credit report can’t be validated with adequate documentation, it should be removed. 
  • Fraudulent items: identity theft is one of the causes of negative items on credit reports. This is one of the hardest tasks to fix. If you are a victim of identity theft, inform the Federal Trade Commission and they’ll help straighten things out.

Tools Used by Credit Repair Companies to Repair Your Credit

Once a credit repair company identifies all the problems in your credit report, they may begin developing a strategy and establishing a remediation schedule. With your approval, the credit repair company may start working on eliminating negative aspects using these fundamental tools. 

  • Dispute letters: These are letters that dispute inaccuracies in your credit report or ask for evidence to prove the validity of negative items. 
  • Cease-and-desist letters: Debt collection agencies can be a real pain. Credit repair companies can ask them to stop contacting you if there are any inaccuracies in their claims or if it’s a case of mistaken identity. 
  • Goodwill letters: These are letters that ask creditors to remove a late or failed payment that happened due to problems that are beyond your control. 

Frequently Asked Credit Repair Questions

How long does credit repair take to work?

It can take anywhere from three months to several years to boost your credit score. This depends on how many legitimate disputes you can make and how many accurate adverse items are in your credit report. In most cases, consumers finish credit repair in about three to six months, but it might take less if your records are relatively error-free.

Can hard inquiries be removed by credit repair companies?

Credit repair companies can help you get rid of unauthorized hard inquiries from your credit report. You also have the capability to remove them yourself without paying a monthly fee. It’s important to check your credit report for hard inquiries you don’t recognize because it might be a sign that you are the victim of identity theft.

What’s a credit report dispute?

This happens when you find something on your credit report that you believe is incorrect, false, or unsubstantiated and you ask the credit bureaus to investigate it. For example, if you see a credit card account on your three credit reports that you did not agree to, you would ask the credit bureaus to correct the error.

After you dispute the negative items on your credit reports, the three credit bureaus will investigate and notify the creditor. Within 45 days, the creditor must provide proof supporting the claim. It’s up to the agency whether to remove the transaction or leave it there after that.

You can escalate the dispute resolution process if your initial complaint is rejected. Typically, this involves sending additional documentation, such as a receipt or canceled check, to prove that a negative item was an error.

How do the best credit repair companies remove negative items and improve your credit score?

A credit repair service may remove a negative item by disputing with the credit bureau, the collection company, or the original debtor. The first thing they do is check your three credit reports to see if there are any negative items that are lowering your credit score. These might include late payments, unpaid debts, or multiple difficult inquiries.

They’ll then request a modification or deletion whenever they discover an inaccurate or false negative item on their credit report. They request evidence from the credit bureaus to verify each negative item. The Fair Credit Reporting Act requires credit bureaus to provide you with a copy of the contract or agreement to prove the accuracy of an item if you desire it. If they are unable to provide such a document, the account will be unverified, and under federal law, any unverified accounts must be eliminated.

You may be able to repair your credit history by directly challenging the original lender or the debt collection firm if that doesn’t work.

How does the Fair Credit Reporting Act benefit consumers?

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how credit bureaus function and ensures that the information they gather is an accurate representation of a consumer’s credit history. The Act aims to safeguard consumers from inaccurate data that might be used to their detriment.

Credit bureaus (Equifax, Transunion, and Experian) must provide a free credit report every year as part of the Fair Credit Reporting Act to help safeguard consumers from identity theft.

Can I repair my own credit scores?

Yes, you can definitely do this. To begin, get a copy of your complete credit reports from all three bureaus (Experian, TransUnion, and Equifax). If you see any issues on your report, dispute them with the credit bureaus. Then, pay down any credit card debt while making every bill payment on time. If you don’t possess any open credit accounts, consider getting a credit card and paying the whole balance every month. If you do not qualify to get a credit card, try getting a secured one.

What is the Credit Repair Organizations Act?

The Credit Repair Organizations Act (CROA) defines how credit repair businesses may operate when charging for credit repair services. Unlawful and deceptive credit repair practices are prohibited by the Credit Repair Organizations Act. In addition, companies providing credit repair services may not request a down payment, credit repair contracts must be in writing, and consumers have certain cancellation rights. Furthermore, the Federal Trade Commission states that the Act prohibits false or misleading statements.

Are credit repair firms legal?

Yes, they are. They are legal in all states except Georgia, where operating such a company is a misdemeanor. Before you spend money on credit repair services, make sure that the company is properly licensed with the relevant agency in your state.

Is it worth hiring a credit repair company?

This depends on your financial status, the content of your credit report, and your goals. If you want a credit repair company to magically remove accurate adverse information and raise your score by 200 points in a few weeks, you will be disappointed. You may accomplish the same things a credit repair company can by working hard and doing lots of research.

Credit repair companies, however, can save you a lot of time communicating with credit bureaus and debtors. This is particularly true if you work with credit professionals familiar with the credit repair industry, and the laws and regulations around it. 

Who Is the Best Credit Repair Company in 2023?

Well, the ball is now in your court! There are many companies in the market today, but luckily you now have all the information you need to choose the best credit repair company for you. Take your time to research the company, their services, how long they’ve been operating, and their pricing. 

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

Credit Repair: The Ultimate Guide to Fixing Your Credit Yourself

The act of fixing your poor credit standing is referred to as credit repair. Your credit position can deteriorate due to a number of factors Repairing it can be as simple as making a call and disputing some mistaken information, or it can be labor intensive. That’s why it’s crucial to take some steps to have a good credit standing before everything falls apart. 

But if your credit score is already down the drain, don’t worry—there are ways to get it back on track. It can be labor-intensive and time-consuming to repair your credit yourself, which is why credit repair companies come in handy.  Credit repair services from these firms can assist you in disputing inaccurate information on your credit report with credit reporting agencies. 

These companies are transparent in what they do and they are professionals who understand how to raise your score again. Credit repair companies usually charge a monthly fee for work performed in the previous month or a flat fee for each item removed from your report. 

How to Repair Your Credit

Whether handling it on your own or working with a credit repair firm, to increase your credit score, you must take gradual steps to improve your credit history. There is no quick fix for your credit. Collection accounts, charge-offs, and missed payments will remain on your credit reports for seven to 10 years unless they are updated. However, you can build a more positive credit history by taking incremental steps over time.

1. Check Your Credit Report 

To learn more about your credit score and what lenders see when they look at yours, check your report and learn how to read it. There are companies that give you free credit score reports. With it, you’ll be able to see the highest risk factors that adversely affect your scores and make improvements to them. You can report incorrect information to a credit reporting agency if you find it. You should also contact the lender that reported the incorrect information and ask them to fix it.

2. Improve Your Payment History

FICO® score models are based on your financial history. The most significant component is your payment history. Late and missed payments will lower your credit scores, and bankruptcy and debt collection can cause significant damage. Your credit reports and scores will remain impacted for seven to 10 years after this negative information is recorded.

Your credit scores take into account the size of your debt and the time of your payments. Your score will be worse if your debts are large and your payments are late. Always make sure to pay your bills on time and keep them current to improve your credit scores.

3. Get Additional Credit Assistance

Consider consolidating your debt via a personal loan or balance transfer credit card if your debt is manageable.

If you can qualify and stick to the program terms, a debt consolidation loan might provide lower interest rates and reduced monthly payments. With a balance transfer card, you may be able to get an introductory 0% APR promotion, during which you can pay down the balance interest-free. Just be mindful not to continue charging on the original card once the balance is transferred.

Seeking the help of a reputable credit repair agency may be beneficial if your debt feels overwhelming and your credit isn’t good enough to get a balance transfer card or a low-interest personal loan. You can get a consultation with personalized advice for your situation.

You can also work with credit counselors to develop a debt management plan (DMP) for unsecured debt like credit cards. You’ll make your monthly payments to the credit counseling agency, and it will distribute the funds to your creditors. You might also be able to negotiate lower monthly payments and interest rates with the agency. If you use a DMP, your credit history will not be adversely affected as long as you continue to make payments on time as agreed to under the new terms.

4. Keep Tabs on Your Credit Utilization Ratio

Credit scoring models usually take into account your credit utilization ratio, or how much you owe compared to how much credit you have available overall. To find out your utilization percentage, multiply your revolving debt (such as your credit card balances) by 100 and then divide by your total credit (all of your credit limits). For example, if you have $6,000 in debt and $60,000 in credit across all of your accounts, your utilization percentage is 10%.

Keeping your credit utilization ratio below 30% is a good idea, but you should have a rule of thumb—the lower the ratio, the better. There are several ways to lower your credit utilization rate:

  • Pay off your account balances. 
  • Increase your available credit. You can do this by asking for a credit limit increase on your current card or opening a new credit card account. 
  • Take a personal loan to consolidate your credit card debt as it’s not included in the calculation of the credit utilization rate. 

Increasing your credit limit might look like a great option, but it could end up costing you more money. Trying to open a new credit card might tempt you to spend more, which might take you deeper into debt. In addition, if you apply for a new credit card, a creditor’s hard inquiry might temporarily reduce your credit score by a few points.

Getting a personal loan to consolidate your debt can result in a zero utilization rate immediately, but obtaining an acceptable interest rate can be tough if your credit score is poor. As it is, paying down your balances might be the most effective method to boost your credit utilization rate and, consequently, your credit scores.

5. Check the Number of Credit Accounts You Have

Your score takes into account how much you owe across the many accounts you own, and what proportion of those accounts are involved in your debt. It might be advantageous to pay down some of your accounts if you can.

Closing an account that you’ve paid down to zero may adversely impact your credit score, as well as your credit utilization ratio. So keep your accounts open even after the balance is down to zero. Keeping paid-off accounts open is a plus, as those accounts are in good standing. 

6. Keep Your Credit History In Mind

Credit score modeling methods, like those used by FICO, take into account an individual’s oldest account and provide individuals with longer credit histories with a monetary advantage. Before closing a credit card account, think about your credit history. Even if you’ve paid off a credit card and don’t intend to use it, leaving it open might be a good call.

Your personal financial circumstances are unique, so you should carefully assess your situation to determine the best approach. Of course, if keeping accounts open and maintaining credit availability would lead to further spending and debt, you may choose to close them. Every individual has a different financial situation, and only you know all the details.

7. Beware of New Credit

Opening several credit accounts in a short period of time can cause lenders to perceive you as higher risk and, as a result, negatively impact your credit scores. Before signing up for a loan or opening a new credit card account, consider the consequences.

However, it’s important to understand that when looking for the best mortgage rates or buying a car, your inquiries may be aggregated and counted as one inquiry for the purposes of credit scoring. In many popular scoring procedures, recent inquiries have a greater impact than older inquiries, and they are shown on your credit report for just 24 months.

8. Once You’ve Reached Your Goal, Keep Track of Your Credit Ratings

Because you have already done the necessary work to rebuild your credit history, you might be tempted to move on and focus on something else. But it’s still a good idea to keep an eye on your credit score. Keeping tabs on your credit score can alert you to any potential problems that could make it drop again. It will also give you a heads-up if someone commits identity theft, so you can take action before it gets out of hand.

How Long Does It Take to Rebuild Credit?

It’s difficult to estimate how long it takes for someone to build back their credit score because each individual’s credit history is unique. The negative information in your credit report might influence how long it takes for you to recover, especially if it occurred a long time ago. You can speed up the process of paying down the debt, but other actions might take months to have a significant impact.

It can take up to 30 days for an investigation into your credit report to finish if you believe the information is fraudulent or inaccurate. When the credit reporting agency discovers your dispute is valid, the information will be removed from your credit report and your score will reflect the change as soon as it is calculated again.

Don’t sweat if your credit report isn’t updated right away if you’re making payments or reducing your credit card balances. It’s critical that you check your credit score regularly to keep track of your progress and make sure the right information is being reported over time. As your credit history improves, your credit scores are likely to improve, and you’ll have a better chance of qualifying for favorable credit terms when you need to borrow again.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this. 

10 Steps to Repair Bad Credit

You might be experiencing bad credit if you’ve got an overdue student loan, a high credit card balance, a lot of overdue collections accounts, or even have been foreclosed on. Lack of good credit is a barrier to many of life’s most important milestones. You may be denied a credit card or even forced to seek assistance for an auto loan or mortgage, and the interest rates offered to you may be substantially higher.

Thankfully, a credit repair company can help you get your credit back on track. They will help you negotiate settlements with creditors, remove inaccurate information, contact collection agencies, prepare letters to credit bureaus, offer advice and support to repair your credit, and update your account. They work with credit reporting agencies on your behalf and ensure that positive changes are reflected on your credit reports. 

They are experts in credit law and well-versed in consumer protection laws and statutes such as the Fair Credit Reporting Act (FCRA), the Fair Debt Collections Practices Act (FDCPA), or the Fair Credit Billing Act (FCBA). 

Keep in mind that bad credit doesn’t have to be a permanent scar on your record. Instead, it can be a life lesson, allowing you to correct your mistakes. If you’re not interested in using a credit repair firm, you can also greatly improve your credit score on your own if you simply have the know-how, the patience, and the determination to stick to your budget. 

Here are 10 techniques for dealing with your bad credit.

1. Check Your Credit Score and Credit Reports Regularly.

To begin do-it-yourself credit repair, you must get copies of your full credit report from all three credit bureaus: TransUnion, Equifax, and Experian. Credit reports and scores are two separate (but interconnected) things.

Credit Score

Your credit score is used by many lenders to determine how much of a credit risk you are. The higher the number, the less risky you are as a borrower and the more favorable of a loan you can receive. Someone with a high credit score may be able to borrow more money and receive a lower interest rate. Your credit score is used to determine your ability to make payments and your eligibility for loans.

There are five factors that comprise your credit score, and they are weighed in different proportions when calculating the final number:

  • Payment history (35%): Always pay your loan on time for a pristine history. 
  • Credit utilization ratio (30%): Huge balances on your credit cards will hurt your score. 
  • New credit accounts (10%): You get a hard credit inquiry whenever you apply for a loan or new credit card. This lowers your score temporarily. 
  • Credit account mix(10%): Having various loan types (e.g. mortgages, auto loans, credit loans, etc.) helps you have optimal credit. 
  • Length of your credit history (15%): The longer your credit accounts have been open, the better your credit score. The longer you maintain a good credit history, the better your score.

Having a credit score above 700 lets you do pretty much anything a person with a higher score can do. Actually, if you have a higher credit score, let’s say 850,  lenders know that they are unlikely to make much money from you, so it can work against you. 

Credit Report

Your credit report shows your credit history in detail. You can check if you’ve made any loan payments late or if you’ve had any late payments in the past. It’s important to check your credit report every now and then to ensure that there isn’t an error on your account. 

You can check your credit score and credit report for free through reputable free credit score tracking apps such as Credit Karma or Credit Sesame. 

2. Dispute Any Errors You Find

The next step in credit repair is to dispute incorrect information on your credit report. While errors aren’t common, they do occur. It’s worth cleaning up any small errors you do see, but don’t try to correct accurate information.

You should also check your identity information (including your Social Security number, the spelling of your name, and address) and credit history to see if there are any problems with your credit.

Make a copy of the report and highlight the errors if you notice any on the list of credit cards, outstanding debts, or major purchases. Make copies of your bank statements next, because the credit bureaus won’t act without proof.

In the letter, notify the credit reporting agency about the error and provide a copy of the report. Share how the report is incorrect and include enough evidence to support the claim. Sending this letter by certified mail is a good idea even though some Credit Bureaus now allow you to submit disputes online.

You must send a letter to the reporting agency asking for a response within 30 days. You can always get the help of a credit repair company to straighten things out for you. 

3. Stick to a Budget and Don’t Go Beyond It

Make sure you’re not spending more than you earn, no matter how painful or scary it may be. You need a budget. This may be extra difficult (though maybe even more necessary) for people who don’t get a consistent income throughout the year. For example, if you’re a restaurant server, an Uber driver, or a freelance writer, your income may vary from month to month, so you will need to budget extra.

Review your tax returns for the past two years to get a sense of how much money you take home in a year. Subtract your regular monthly expenses from your current income to get your starting point. Next, estimate your monthly spending habits for other expenses such as gasoline, groceries, and entertainment. Create a limit, based on your income, of what you can spend in each of the different categories of expenses. Resist impulse purchases.

4. Pay Your Bills on Time

Make sure you pay all your bills on time. Missing a payment accounts for 35% of your credit score. That’s heavier than any other factor. Missing a single payment on a credit card can knock down your credit score significantly. To improve your credit score, paying your bills on time is the most important thing you can do. Even if you are only paying the minimum, your credit score will improve. 

To prevent damaging your credit score,  make as many bills as possible autopay. Even if you normally pay your bills on time, autopay is still a good safety net if you somehow forget.

Some bills might not be eligible for autopay. Make yourself a number of reminders if you fear you will forget about these. For example, you can set a mobile notification a week before the due date asking yourself to pay early—and another late notification on the due date. If you’re really concerned, put sticky notes on your bathroom mirror reminding you to pay. It is critical.

5. Pay Off/Down Credit Card Balances and Other Debts

Avoid being charged high-interest rates by paying off your credit card in full before each due date. You may not always be able to do that, but you must develop a plan to clear your debt across multiple accounts. It is not bad to focus on the debts that cost the most to pay before tackling debts that cost the least.

When you’re making no progress at all on your five credit cards draining away your bank account in the form of minimum payments and interest charges, it can feel like you’ve got nothing to show for your efforts. Prioritize paying down the smallest loan until it’s finished, then you can focus on the next smallest loan. Your debt decreasing can also help your mental state.

6. Keep Track of Your Credit Utilization Ratio.

Using more than 30% of your total credit is a bad idea. Credit utilization accounts for 30% of your credit score. In short, 30% of your credit score is based on the amount of credit you are using vis-à-vis the amount of credit that you have available to you. Consider the following example: You have a $10,000 credit line on one credit card and a $5,000 outstanding balance. In this situation, your credit utilization is 50%.

A good credit utilization ratio is 30% or less. If a lender sees you using 90% of your available credit, it may indicate financial trouble. Try to pay off as many of your large purchases as possible to prevent exceeding the 30% credit utilization threshold.

7. Don’t Close Your Old Credit Cards

Even if you don’t use a credit card, it may still be worth keeping an account. Your credit score is determined by the proportion of your debts that are currently outstanding. This is known as your credit score’s “importance factor.” The longer the average age of your debts, the better your credit rating.

For instance, if you opened your first credit card four years ago, the average length of your credit history is four years. If you open another credit card today, the average length of your credit history will be two years. And if you want to close your first card, the average length of your credit history will be one day. The accounts that you close in good standing will remain on your credit report for several years, but the impact on your credit score when the account is removed will be felt. 

Don’t just close your credit card if it no longer suits your lifestyle. Keeping it open will help preserve the average age of your loans. It’s smart to keep a credit card around if you don’t have to pay an annual fee. However, if you don’t use your card, it’s probably not a good idea. You can call your bank to switch to a no-annual-fee version of the card.

8. Ask for Help

You can get the help of a professional credit repair company to improve your credit score. Inaccurate data, blemishes, and reporting mistakes can all have a negative effect on your credit score. Also, late payments, collections accounts and charge-offs can have the same dramatic effect. A poor credit score not only affects your ability to get a loan but also get employment in some cases. A credit repair company comes in to help you get everything on track. They are skilled negotiators, who know all credit laws and can offer you ongoing support and advice.

If you must, lean on those with better credit. It still is possible for you to achieve some of the greatest milestones in life even if your credit score is holding you back. Ask family members to assist you in improving your score if you need help buying a house or car.

An authorized user card is one way to get your own good credit history on someone else’s credit report. It’s an injection of healthy credit habits into your credit score. They don’t even have to give you the authorized user card, they can just shred it and allow you to reap the benefits of their good behavior secondhand.

You may want to consider asking a relative with good credit to cosign with you if you want to get a new loan. For instance, if you want to apply for a debt-consolidation loan but are not qualified, a cosigner can help you out. In this case, if you default on the loan, the family member will be responsible for the bill.

9. Do Not Apply for New Credit Cards

Even if you were offered a sign-up bonus for a new credit card, resist the temptation to open one. Each time you ask for a new loan, the lender will scrutinize your credit to determine if you’re worthy. This is known as a “credit check.”

There are two kinds of credit checks: soft and hard credit pulls. A soft credit pull has no adverse effect on your credit score, as it’s used to pre-approve loans for any potential customers. Hard credit pulls, on the other hand, can lower your credit score temporarily. Lenders use this to decide whether they can extend the loan to you. 

Credit scores are likely to plummet dramatically if you apply for new credit too frequently, although you might see a rebound within a month or two. Frequent credit inquiries are viewed as a warning sign by lenders. They don’t want to see lots of inquiries because it can reflect that you are desperate for money.

10. Use Credit-Building Tools

To get back on track, use available credit tools to help you. There are unique ways to build your credit on the internet. You can get apps that help you build credit by offering various types of loans—each of which you pay down monthly. You’ll find some that even send you back the initial term of the loan, minus the interest rate and a small application fee, at the end of the term. 

When you make a payment each month, good behavior is reported to the Credit Bureau and your credit score and profile may improve. The initial application might lower your credit score, but if you make all payments on time (essentially to yourself), it will increase.

You can also improve your credit by obtaining a secured credit card from a bank. These cards are issued to people with poor credit because they are effectively zero risk for them. To put it simply, you hand over money to the bank and they give you a credit card with a matching credit limit. For instance, if you give the bank $2,000, you’ll receive a credit card with a $2,000 limit. Should you neglect to repay your debts, the bank will keep your money. When you graduate from a secured credit card, the bank will return your money.

Wrapping Up!

It takes tremendous willpower to climb out of debt, but you can do it. Make sure there aren’t any errors on your credit report and dispute them with the credit bureaus. Even if it’s just the minimum payment, make sure you pay all your bills on time. Starting with the smallest credit card balance, focus on eliminating credit card debt as quickly as possible. Keep your credit utilization low, and keep all your credit cards open and in a sock drawer, if you must, to remove temptation (as long as they don’t have annual fees).

There really is no quick credit fix. However, if you plan to take on a big debt or buy a new home, it’s worth the effort. You’ve also got credit repair companies like High Score Now to help you out.

Thank you for reading our article. We hope you learned new ways to battle creditors and banks while protecting yourself.

We would encourage you to become a member of HigherScoreNow.com and start to leverage all the benefits of having good credit. You deserve this.