Are you considering fixing your credit on your own instead of working with credit repair companies?
A credit score tells about your financial health, if you have a good credit score, it means you are responsible and are able to manage your credit well. However, if you have a poor credit score, you are in trouble. But do not lose hope, there is no fast way to remove a bad credit score. However, there are ways to repair your credit on your own.
Here are some guidelines to repair your credit score:
1.Review your credit reports – The three major credit bureaus ( Experian, Equifax, and TransUnion ) are required to give a free copy of your credit report once a year. Visit their website https://www.annualcreditreport.com
2.Dispute any errors – Once you get your free credit report from the credit bureau, check your credit history, verify the information on your credit, payment history, all items, and find any errors even a small error, dispute them as soon as possible. Analyze other items that might hurt your credit score and take action to avoid problems in the future.
The credit bureau has 30 days to contact creditors to verify the information and respond. It is a smart idea to send your dispute letter via email so you have the proof of delivery date.
3.Pay bills – Payment history is 35 percent which has the largest portion of your FICO score. If you failed to make a payment on time, your credit score will definitely be hurt. Paying bills on time tells how responsible you are and how you are able to manage your credit well.
4.Pay credit card balances – Pay down your balances bit by bit until your outstanding balances are gone. Always make a budget to pay your balances. A Credit Utilization or Credit Utilization Ratio is a 30 percent portion of your credit score. It will negatively impact your credit score rating if you have maxed out your credit limit.
5.Open a new secured credit card – Try to find a bank that does not charge an annual fee. However, it is best to open an account with your existing bank. Opening a new credit is a 10 percent factory on your credit score. But, make sure that your application will get approved, because hard inquiries may affect your credit rating.
6.Keep an old account open – The age of your credit history in your old account has an impact on your credit score. Length of credit history is a 15 percent portion of your credit score, it is not that big but somehow, it will help your credit score at a good point.
7.Types of credit in use – Having a mixed account such as different credit cards, home loans, retail, or installing loans may help your score improve. The type of accounts you have has a 10 percent portion of your credit score.
How long to repair a credit score?
In general, it will take about three to six months. However, the repair process depends on how the damage your credit has. Most negative items will remain in your credit history for seven years.
What factors affect credit score?
Fico score has been divided into five (5) categories.
35% Payment History – This shows whether you make your payment on time
30% Current Loan and credit card debt – This shows how much money you owe
15% Length of your credit history – A longer credit history will help your score rating
10% Types of account you have – Mix cards such as credit cards, instalment loans, mortgage loans though it is not necessary to have one of each.
10% Open a new credit – Only apply as needed.
Repairing your own credit is not really hard, you are just required to give the time, effort, and patient. Your score will be definitely straight up, you will no longer worry about getting a loan, job and you will enjoy the best and affordable interest rate.