Bad credit can raise your insurance premiums, cost you jobs and even prevent you from owning or renting a nice home. Credit checks are now run for many types of transactions, and people with bad credit have fewer attractive financing and employment options than people with good credit. Your credit score is more important than ever.
Get a Loan
Many people want to improve their credit rating so they can take on a house or car loan. But even before you make that house or car purchase, if you can get a reliable co-signer, you should look into getting a small loan. Even with bad credit, with a good co-signer you can get a loan. Once you take out the loan, pay it on time every single month. Showing this type of responsibility helps to illustrate your ability to carry multiple kinds of credit and diversify the types of credit on your credit report. Remember, though, that any defaults on the loan also go against your co-signer’s good name.
Stop Applying for Cards
While applying and receiving a loan reflects well on your credit report, the Federal Reserve Board warns that applying for several credit cards in a short period of time looks bad on a credit report. When you make multiple inquiries for credit, it appears that you have a reason for desperately seeking financing. The implication is that you have run into financial trouble and are seeking lines of credit to help get along.
Pay On Time
The best thing you can do to repair your bad credit is to pay all your monthly payments on time and in full. To get on the right path, consider contacting your debtors and renegotiating any high interest rates. This move with help you avoid late payments and late fees by shifting your payments into a range that you are able to pay more easily.
Raise Your Credit Limits
A banker or employer does not want to look at your credit report and see that you have $9,999 of credit run up on a $10,000 credit limit. This type of information indicates that you may be heading for financial trouble after you max out all of your credit cards. Request to have your credit limits raised on a few of your credit cards to give the appearance of a better debt-to-credit-limit ratio and to ward off overcharge fees.
The Federal Trade Commission has enacted the Fair Credit Reporting Act. As a part of this act, every U.S. citizen is entitled to one free credit report each year. To repair your bad credit, take advantage of this offer so you can correct any wrong information on your credit report. You may even have a case where you are in good standing with a creditor who does not appear on your credit report, but should. Clear up these discrepancies by submitting a formal dispute. Instructions for each credit bureau’s dispute policy can be found on the free credit report.