The Essential Credit Repair Guide for Beginners

If somebody asks you about your credit score, how do you respond? Is it a time when you can beam with pride and answer clearly? Or do you break eye contact and start explaining why it's not as high as it should be? 

For any adult consumer, credit is a serious matter. A higher credit score could mean the difference between a lower or higher car payment or a reduced security deposit on a smartphone. If your credit is on the lower side, it has significant financial consequences.

If you're one of the many consumers looking for credit repair, don't worry! Improving your credit might be difficult, but it can happen. All you need to do is develop disciplined habits and listen to sound financial advice. 

To that end, we've provided several tips below to help you improve credit and pay debts faster. Sound promising? If so, then let's jump right in!

Credit Repair Starts With Credit Reports

When you want to improve your credit score, you should always start by getting a free credit report. Repairing credit report errors or omissions help to ensure your record is accurate. It also helps to ensure no fraudulent activity becomes attributed to you. 

Each of the three primary credit report agencies must give you a free credit report once a year. So, this means if you space them out, you can receive a credit report every four months.

This report will display your credit history, including all credit cards, loans, and accounts that collection agencies received. Other information could include legal acts such as foreclosures or bankruptcy filings. 

If you wanted additional copies, you may also purchase a credit report from any of the agencies. However, you likely won't need any extras, considering you can get free copies from each agency.

What Credit Report Errors To Look For

An astonishing number of credit reports contain errors in their findings. These errors could have significant consequences. In fact, these errors could lead to you receiving a denial on a credit application.

As such, when you get your credit report, comb it for any errors. These errors include such things as:

  • Incorrect personal information
  • Extraneous accounts that don't belong to you
  • Missing personal accounts 
  • Duplicate accounts
  • Data management errors
  • Fraudulent activities

Discerning these errors and correcting them has resulted in tremendous benefits for many people. Moreover, those benefits occurred in a relatively short period. If nothing else, it'll provide more advantages than never checking your credit report.

Pay Your Bills On Time To Improve Credit

Fixing errors in your credit reports is an excellent first step to improving your credit. However, your credit report may not have any mistakes. Even if it does, it only goes so far if you have late payments. 

As such, the second most critical step to improving your credit score is paying your bills on time. If you have an overdue bill, pay it immediately. If the bill takes more than 30 days to pay, it will become a late bill. 

This late payment allows creditors and lenders to report your account to credit agencies. The situation only gets worse with each day the bill remains unpaid. 

So, if you see in your credit report that you have outstanding payments, do your best to pay them off in the short term. In the long-term, budget to pay each of your bills on time. 

If you pay all of your bills on time for six months, you'll start to see your credit score improve. The more consistency you have, the better your score becomes. 

Payment history accounts for 35% of your credit score, making it the biggest contributing factor. Make sure you take it seriously. 

Increase Your Credit Limits

Another way to increase your credit score is to build your credit limits. The second-largest factor in calculating your credit score is amounts owed, or credit utilization, weighing in at 30 percent. You can increase your credit score by asking your credit card company for an increased credit limit.

How does this benefit you? While approaching your credit card maximum doesn't inherently reduce your credit score, it does make you a risk for overextension.

However, you can evade this risk by increasing your credit card's maximum amount. If you increase your amount and keep your spending low, it can help bolster your credit score. 

Pay Off High-Interest Credit Accounts

When faced with multiple balances to pay off, people usually take one of two tracks. The first is to pay off the account that includes the highest interest rate. The second option is to pay the lowest interest rates, preventing them from accumulating more interest. 

In many cases, it's best to pay off the high-interest account. It's better to tackle the most significant expense first; that way, its interest can't wear out your finances over a lengthy period.

As you take on this interest payment, don't neglect to pay the minimum payment amount of other accounts. The last thing you want is to take care of one debt while others pile up. 

Open A New Credit Card

Opening a new credit card may not be the most intuitive way to improve your credit score, but it works well. When you open a new credit card, you are increasing your total available credit. This increase lowers your credit utilization ratio. 

When you consider which card to open, explore whether it has an annual fee and if you're willing to pay that fee. You should also avoid opening many accounts at once, as this makes you look riskier to lenders. 

Lastly, this technique isn't a complete hack. Credit history is a factor in your credit score, too. The longer you've been paying on a line of credit, the better it looks. 

Work With A Credit Repair Company

Credit repair involves a lot of work, which can seem overwhelming at first. However, if you discipline yourself and keep to these tricks, you can see improvement in your credit score.

You don't have to repair your credit alone, though. By working with a skillful credit repair company, you gain access to expert financial advisors who can guide you each step of the way. 

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William Anthony is an Entrepreneur, Strategist, and Blogger. Back in 2015 when He checked his credit score, it was lower than 500. That's not even a passing grade! Since then He always wanted to know more about how credit works, and for the last 7 years, He has researched and tested all things about Credit Score, Credit Card, etc. And now, after succeeding in many cases in His Credit Score Journey, He wants to share all of his experiences with you guys. Hope that reading articles about Credit Score, Credit Cards, Credit Repair, etc. will become more clear for your own Credit Journey.

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