There is a misconception that it is impossible to engage in fast credit repair practices. While you will not be able to raise your score overnight by triple digits, you do have a lot of information available from companies that engage in personal finance tips to will help you recover steadily.
1. Get A Free Credit Report
Before you do anything, you must know your current credit score and report information with the major credit bureaus: Experian, Equifax and TransUnion.
Step One: Visit Annual Credit Report
Step Two: Fill Out The Form With Name, SSN, Address
Step Three: Pick Which Of The Big Three Reports You Want
Step Four: Click Request And Answer A Few Questions To Verify Identity
Step Five: Review Each Of Your Reports Online
Credit scores like FICO range from 300 to 850. If your score is between 300 and 699, you have a bit of work to do as your credit is questionable and risky.
- Below 600 indicates you have bad or no credit.
- Between 600 and 649 is a poor credit score.
- Between 650 and 699 is a fair credit reputation.
- If your score is between 700 and 749, you have good credit.
- If your score is over 750, you have an excellent score.
2. Verify Your Credit Report Is Correct
In 2015, the Federal Trade Commission found that 20% of consumers have credit errors on at least one major credit bureau report. The FTC also found that about 5% of consumers have errors that increase the amount paid for products or services.
Take the time to go over each of your reports to see if the data is correct. Look for any unpaid bills, credit history discrepancies, or lines of credit you are not aware. While an error does not signify that it is the reason for a low credit score, clearing up any mistakes is an important start. Critical issues you should be aware include:
- Unpaid Debts
- Indicators Of Identity Theft
- Debts Past Statute Of Limitation But Still On Your Report
- Debts That Others Owe Like Divorce Decrees Or Co-Signed Loans
3. Set A Plan Of Action In Place
Whether you decide to repair your credit reputation or turn to the experts who offer credit repair services, you must have a plan in place to raise your credit score. There is no one-size-fits-all solution as each person’s credit and payment history is different. When you blend our knowledge with your history, it helps you establish the critical areas you need to improve while engaging in consumer activities that boost your score in real-time.
- Payment History: 35% Of Score
A critical component to getting new credit is establishing your probability to pay your bills which is why your payment history is a vital part of your score. Have you repaid loans, mortgages, or credit cards without defaulting? Are you making your payments now on time? These are critical consumer behaviors that creditors will consider when deciding on your creditworthiness.
- Credit Utilization Ratio: 30% Of Score
Credit utilization is just as important in the present as your past payment history was as it indicates your current credit behaviors. Are your balances too high? If you have a $5000 credit line and owe $4000, your credit utilization rate is 80%. It should be below 30%, so you have work to do. You should pay higher monthly payments while not adding any new debt to the balance
- Credit History: 15% Of Score
How long have you had your credit line accounts? The length of your credit history will hurt people with no or low credit significantly because it will either put you in a higher interest rate or disqualify you altogether. Since there is a lack of data to help establish your credit history, you should open a new phone line or find other consumer-friendly ways to establish it
- New Lines Of Credit: 10% Of Score
Opening a new line of credit can lower your credit utilization rate significantly. Since your debt to credit limit shifts, you will want to be careful of opening too many new accounts in a short period because it is a red flag to creditors that you may have financial difficulties. Creditors weigh the risk against the reward, and if they think your financial situation is less than optimal, it will affect your credit line amount and interest rate. Multiple inquiries will also decrease a score as well.
- Lines Of Credit In Use: 10% Of Score
Your FICO score considers the number of credit lines you have open. This component goes hand-in-hand with credit utilization as this establishes the base for which your debt will compare. Applying for a new line of credit will raise your credit limit, so this is a vital reason to work on your credit score so that you qualify for increases and new lines of credit naturally.
Knowing the FICO formula narrows the scope of reparation requirements. If you research each component and establish ways to increase your score in increments, it will dramatically affect your score in both the short and long term. You will also learn to ask how do credit repair companies work to improve these five factors.
4. Visit Credit Repair Websites For Tips
Sometimes the best sources are sites that teach you how to build your credit. It also helps to learn more about the process if you decide to repair your credit yourself. Visiting sites that provide fast credit repair tips and credit repair services also ensures that you know the crucial resources needed to raise your credit score in a variety of ways.
5. Weigh The Value Of Credit Repair Experts
Do credit repair companies work? That is a question that many consumers want to know as there are different kinds of companies in the market. You will quickly learn the difference between quality credit repair companies and scammers. Weigh the value of credit repair services so that you know which ones will assist you in fast credit repair.
Raising your credit score requires you to gain the knowledge you need to set into place a systematic plan that will help you move through each credit repair stage consistently and strategically. Visit us here for more information on credit repair tips and techniques.