Did you take out a huge loan and now the monthly payments are drowning you? Yeah, we know it sucks. Your credit score probably took a huge hit because of late payments or no payments.
There are many steps to take when fixing your credit scores. Some include understanding your finances, finding errors and troubleshooting problem areas that you need to confront such as overspending. When you break down the details, these are the steps to fixing credit issues:
- Know your credit score and get a copy of all of the credit reports.
- Fix the errors on your credit reports.
- Keep a healthy number of credit accounts and start building a positive credit history.
- Control how much you use your credit; too much is bad, too little is bad.
- Keep an eye on how old your credit accounts are.
It is not easy to fix your credit and it won’t be fun, but the relief you will feel when your credit is at a healthy standpoint will be worth the time and effort you have put into fixing the issues. Keep an eye on your credit using tracking apps like Credit Karma or Credit Sesame. A score between 700 and 740, depending on how they are scored, is considered “good credit” and is most likely enough to qualify you for the best credit cards and lowest mortgage payments.
If you find errors in your credit repair journey, dispute them! Errors don’t happen often but they can happen. Small errors are worth cleaning up. Once you get a copy of your credit, check your identity information:
- Social security number
- Spelling of your name and address
- Credit history
Review the list of credit cards you have active, outstanding debts, and major purchases. If you see a mistake, make a copy and report the error. Next, gather all the information that you have to back you up, such as bank account statements. These are important because credit bureaus won’t do anything to help dispute your claim without proof.
Write a letter to a credit reporting agency: Experian, Equifax, or TransUnion. Explain the mistakes and include a copy of the detailed report along with your personal documentation.
- Experian: 1-888-397-3742 – www.experian.com
- TransUnion: 1-800-916-8800 – www.transunion.com
- Equifax: 800-685-1111 – www.equifax.com
Once you have finished reporting those errors on your credit report, take the time to see if you are still able to afford your spending habit every month.
- Pay your bills on time
- Pay down debt (especially credit card debt)
- Avoid applying for credit
Estimate your monthly spending habits compared to your monthly income. Gas, groceries, and entertainment; create a limit for each expense.
It may take months, or in a worst case scenario a couple of years, to rebuild your credit score, but if you plan on buying a new home or taking on any huge debt, it is well worth it.