Fix Credit Score
If you are wondering how to fix credit score, chances are that yours is rather low. This is becoming a big problem for lots of people as the banks andfinancial institutions are less inclinded to provide credit than they were two or three years ago.
In this time of economic uncertainty it’s difficult to watch as our home values drop along with our investment portfolios. Now, more than ever, it is important to maintain a strong financial strength to get through these trying times. It used to be that having a 500 credit score wasn’t that far off from still obtaining new accounts, but those days are over. If you desire to build your borrowing power then you need to work on getting your score up as much as possible.
That’s not to say that it is hopeless, because it isn’t. You can fix a credit score. But you have some work to do. It is important that you know what you are up against and that means pulling your reports. This will show you why your rating is low. You need to ask for your credit reports from all three agencies i.e. Transunion, Equifax and Experian as all are slightly different in how they report things and how they interpret financial information.
The first thing to remember is that you cannot under any circumstances be late on payments. If it means getting a second job, you will need to do it- at least for now. Late payments slice away at your rating faster than you can imagine. It also shows other lenders that you are a higher risk. If you have been late in the past, don’t worry about that for now. Just make a decision today that there will be no more mix up with dates and all bills and minimum payments due will be paid on time.
Next, look for collection accounts. If you see some, contact them to settle. They will be glad to get something versus nothing. You will be surprised what they will end up taking. Get the settlement in writing, pay the debt and submit the proof to the reporting agencies. Then move to the next one. Just be careful not to do too many at one time as you can cause a tax issueand the last thing you will want is the IRS on your doorstep demanding payment. This may have a temporary adverse effect on your credit rating but in time the fact that these accounts are no longer outstanding will help a lot.
Some people think that old accounts should be closed, especially if you don’t use them. This is not true. It is actually to your benefit to keep them open so long as you don’t have too many of them of course. It proves longevity and that you have a proven history of repaying your debts – this assumes of course that they are in good standing i.e. you haven’t missed payments or left bills completely unpaid.
Also, do not open any new credit facilities for now. We are trying to tidy up and fix credit score and applying for new borrowing won’t help to achieve this aim. Increasing your debt ratio is another negative mark on calculating your rating so best avoided if possible. This is especially true with credit cards. If you have a lot of accounts with high balances and are struggling to meet the monthly payments, contact each company and ask them to reduce the interest rate you are paying and if possible the minimum payment due. Explain you want to clear the debt but also want to fix credit score and therefore need some help. You could be plesantly surprised at their reaction. Financial institutions like to see their clients taking responsibility for their debts. This is just another way to raise your 500 credit score while maintaining your household. Some sacrifice may be in order, you may have to work a second job or do overtime at your current one. You may have to see what items you could sell on EBay or similar in order to generate lump sum payments to pay down your debts quicker but in the long run you will see the work will pay off.