A good credit score can make it easier to qualify for financing, rent an apartment and save on auto insurance. But it’s not something that everyone has, and sometimes bad things can happen that hurt your credit. When that happens, fixing your credit can be a long process.
It’s worth your time to carefully review your reports from each of the three major credit bureaus, Equifax, Experian and TransUnion, and dispute any errors you find. Credit bureaus are required to investigate and correct any disputed information within 30 days of receiving your dispute.
You can also help your credit by focusing on paying down delinquent accounts and making payments on time. Lowering your credit utilization, which measures how much you owe on your cards compared to the total limit, is another big factor that can improve your score. Getting your balances to zero or below is ideal. It takes some work, but it can be done if you prioritize your spending and pay down the amounts you owe.
As a general rule, legitimate negative information on your report will remain for a specific duration (often seven years), so you may need to wait to see the effects of those items fade over time. That’s why it’s important to make sure you have a plan in place, so you know what steps you need to take when it comes time to apply for financing or rental agreements.
Many companies offer to “fix” your credit for a fee, but you can do it on your own by disputing errors that appear on your report. The credit-reporting agencies will investigate the disputed information and will respond to you in writing. If you don’t hear from them after 30 days, you can send them a letter asking to speak with a supervisor.
The most common mistakes on a credit report are outdated public records, incorrect addresses, inaccurate aliases and names, and erroneous amounts of debt or income reported to the credit reporting agencies. Some of these errors can affect your credit score significantly. If you notice any errors on your credit report, check the credit bureaus’ website to find the contact information for each.
Another option is to seek professional credit counseling, but keep in mind that this will require a significant time commitment. Credit counselors can help you create a budget and manage your finances. They can also assist you in creating a debt management plan (DMP), which involves making a single monthly payment to the credit counselor, who then makes payments to your creditors on your behalf. These plans typically don’t involve negotiating with creditors to reduce what you owe, though they can often help you avoid creditor harassment. They can also advise you on how to handle future credit inquiries. This can be particularly helpful for people with a short credit history who are trying to rebuild their scores. They can provide you with strategies to ensure that you don’t fall into the same traps in the future. fixing credit