If you’re planning to make a big purchase in the future, like a new car or buying your first home, you’ll know that credit has a massive impact on your purchasing power. If your credit score is lower that the high 600s, it’s time to start working on repairing your credit now! You’ll get better interest rates and approved for higher loans too!
- Get Your Credit Report
Your first step will be getting ahold of your credit report. There are many sites that will give you a free credit check without it affecting your credit, known as a soft inquiry. By law, each of the three major credit bureaus are required to give you a free credit check every year. If you space them out, you can check your credit every 4 months. Your credit report will show your credit history, open and closed accounts, loans and legal actions like foreclosures or bankruptcies.
- Check For Errors
Review each credit report for errors. Even small errors can benefit you. Check for spelling errors, addresses, accounts that aren’t yours, inaccurate or incorrect inquiries and fraudulent activity. If an error appears on one credit report, check with the other two credit bureaus immediately to see if the error appears on all three.
Contact the reporting bureau immediately to dispute errors. This can sometimes eliminate or resolve the debt immediately. There are very strict stipulations a creditor must follow to report your debts. The credit bureaus are legally obligated to quickly resolve any errors. You can also reach out to the lender or creditor to fix the errors on their end, especially if your account is in good standing for repayment.
- Pay Up
Pay your late and past due accounts. Catching up and keeping your accounts in good standing is important to your credit health. Until a payment is over 30 days past due, it isn’t reported to the credit bureaus. Budget wisely and quickly if you begin to fall behind. This will also keep your accounts out of collections, which can hit your credit score even harder.
When negotiating payments with a creditor, always request a pay-for-delete letter so that the account will be removed from your credit upon your final payment. This works for accounts you’ve negotiated for lower amounts too.
- Build Credit
Once you’ve lowered your debt, it’s time to start building more positive credit. If your credit score is poor, opt for a secured credit card and pay it on time every month. This can build your credit quickly and easily. With positive credit history, you show lenders that you are a responsible borrower, increasing your chances of getting approval for that big ticket purchase.