Having bad credit is like having a disease in the financial sense as many lending institutions want nothing to do with individuals with poor credit. If you have bad credit, you already know how tough it is to find financing and when you do come across lenders that are willing to deal with poor credit, you will notice that the interest rate charged is through the roof. Therefore, it is paramount that you take all necessary steps to improve your credit score quickly and efficiently.
With the current economic conditions and the slow job market, bad credit is becoming increasingly more prevalent. If you are one of the millions who have poor credit, then you can take the following steps to improve your credit score. There are some steps you can take to boost your score faster, but you should know that having a good credit score will not happen overnight.
Order Your Credit Report
The very first step you should take is to order your credit score and your credit report from all three credit bureaus. There are three major credit repositories in the United Sates ((TransUnion, Equifax and Experian) and two in Canda (TransUnion and Equifax) that use the FICO scoring model to report your credit score. See bellow for ordering your credit report.
US Residents: According to the US federal government, the only authorized site for getting your credit report is AnnualCreditReport.com and according to Fair Credit Reporting Act, you can request for your free credit report once a year.
Canadian Residents: You can order your free credit report to be mailed to your from each credit bureau. Although you could obtain your report online or by fax, the only way of getting your report for free is through mail. Equifax Canada (www.consumer.equifax.ca, Tel: 1-800-465-7166, Fax: 514-355-8502) TransUnion Canada (www.transunion.ca, Tel: 1-866-525-0262)
Get a Quick Boost!- Report and Fix Errors on your Report
Any statement that adversely impact your credit will remain on your record for as long as 7 years, and that means it takes a long time to get rid of those negative comments unless you can removed them another way. The fasted and most important way of improving your credit score is to go through your credit report carefully to see if there are any errors. It is reported that many of the negative statements that adversely affect your score are either inaccurate or expired information. If you happen to spot such adverse information, report them to the agency in writing as soon as possible. For some errors you may need to contact the creditor first and have them give you a statement in writing that the information is incorrect or that the situation has been rectified.
One you have these information, you can mail them to the credit bureaus so that they can updated your credit report. It may take the bureaus a few weeks to update all record; however, this is the fastest and quickest method to get a boost on your credit.
Consolidate Credit Cards and Loans
It is better to consolidate all your credit card debts and loans into a single loan with a better interest rate. Consolidating not simplifies the debt management process but it can also lower your monthly payment. Credit bureaus do not like to see too many loans and credit cards on your file. Having a single loan resolves that issue. This is a great way of eliminating all those credit cards. It is best to have a single loan and just a credit card that you use occasionally.
Avoid Going Over Your Credit Card Limit
Do not pile up credit card bills month after month. Exceeding or getting close to your credit limit is something that all credit agencies frown upon. As mentioned above consolidating will bundle all your loans and debts into a single loan that is more affordable to pay. Thus, it is recommended to keep a single credit card that you use occasionally and you pay off the entire balance each month.
Build Your Credit History
Keep just a single credit card that you use occasionally and pay the entire balance each month. We are not advocating the use of credit cards on large scale; however, to establish and build your credit again it is necessary to have a single credit card that you use occasionally for some shopping and you pay the entire balance each month. Do not use this card for daily shopping as this could put you back in debt.
Pay Your Bills on Time
We don’t really want to point out the obvious s but for the sake of the few, please pay your bills on time. Every time you miss your deadline, your creditor could report it to the agencies and that will lower your credit score.