It is quite easy to get into bad credit. And it does a lot of damage to your overall financial health. It not only makes things difficult but also expensive for you to buy and maintain in the longer run. Fortunately, you can fix your bad credit with a few simple steps.
Poor credit does not help you qualify for new credit cards. And worse of all, you will end up paying a higher interest rate for loans. Fixing your bad credit would need some effort and patience. Do not fall for any schemes that will help you repair the scores overnight. Here is all that you need to do.
- Current Status:
You can start with getting your full credit score from different bureaus. Depending on the bureau, you might get the report for free of cost or pay a small amount for the same. Your credit score is an indication of whether you have good credit or bad credit. Usually, the scores range between 300 to 850. Any score above 700 is normally considered to be a good score.
- Dispute Errors:
The credit score reports are quite detailed. You can look at your credit card details, major purchases and outstanding debts. While it isn’t a regular occurrence, there might be some errors.
If you find an error in any of them, it is essential that you take a copy of all supporting evidence such as bank statements, make a copy of the same, highlight the error and mail it to the respective bureau.
- Pay Bills On Time:
To fix your bad credit, it is essential that you do not repeat some of your mistakes. If you had missed out on some of your payments, it is time to fix those. You can set reminders to help you make payments on time. This will help you avoid making any more damage to your credit score.
- Slash Your Credit Card Dues:
Up next, you should try to cut down your outstanding credit card dues as soon as possible. You need to squeeze your expenses a bit to make way for more cash to pay off the dues. It might not be possible to completely get rid of the dues, but strong steps towards it are essential.
- Avoid Getting New Cards:
Every time that you apply for a new credit card, it goes down as a hard inquiry and it hampers your credit score. While you are trying to fix a bad credit score, it is essential to skip applying for new credit cards. Once you have fixed your score, you can start applying for a new credit card.
- Credit Limit Utilization:
Another crucial point is to ensure that you do not overuse your credit limits. If you use your credit card for more than 50% of its total limit, it will impact your credit score. Thus, it is a good habit to keep the utilization low. And opt for an increase in credit limit when available.
Following the above steps will help you repair your bad credit and improve your financial health.