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4 Credit Repair Tips
A credit score is the basic measure of your
financial health. Your credit scores help lenders determine your likelihood of
repaying any loans they make to you. The better your score, the easier it is to
be approved for a new loan, a new line of credit, and when financing a business
or purchasing a new car.
A good credit score also helps you qualify for the lowest
available interest rates and better terms when you borrow. Here are some simple
steps you can take to repair your credit and boost your credit score.
1.
Check your credit
score and report for errors
It’s a good idea to examine your credit scores and
reports from time to time and check for errors. If you spot any errors, for
instance, an account you didn’t open, or someone else’s details have been mixed
up with yours, you can file a dispute to remove your account. In case the
errors appear on all three of your credit reports, you will need to file a
dispute with each credit bureau (Equifax, Experian, or TransUnion).
The Consumer Financial Protection (CFPB) gives
information on how to initiate disputes for every credit bureau online, through
email, or by phone. Once you have filed a dispute, the credit bureau you have
filed with has up to 30 days to investigate your claim. A trusted credit repair Australia can also help you check your credit report
and correct any errors.
2.
Always pay your
bills on time
Your payment history highly determines your credit
score, and long on-time payments history can help you achieve great credit
scores. Your payment history accounts for 35% of your credit scores.
If you want to fix your credit, you must ensure
you don’t miss credit or loan payments by more than 29 days. Payments at least
30 days late can be reported to the credit bureaus and affect your credit
scores. If you struggle to keep track of payment dates, you can set up
automatic payments for the minimum amount due to help you avoid missing
payments. It can also help you use a budgeting app or website, especially if you have
multiple credit cards.
3.
Limit your credit
utilization
Your credit utilization ratio greatly affects your
FICO score. Your goal should be to keep your credit utilization ratio below
30%, if possible, but any ratio lower than that is generally considered good.
For instance, if your credit card lines total $12,000, you should keep your
unpaid balances below $3,600.
4.
Pay off other debts
Paying off your outstanding debts can help boost
your payment history and reduce your credit utilization ratio. When planning to
settle your credit card debt, consider the snowball and debt avalanche method.
The snowball method focuses on repaying your smallest balances first, while the
debt avalanche focuses on paying off your high-interest card first. Examine
both to determine which method best suits your situation.
