If you’ve tried to make any major purchase like a car loan or get a credit card, you know how important your credit score is.
Those three numbers are going to be the make or break when it comes to an acceptance or rejection.
If you find yourself on the “bad” end of the credit score, you don’t have to stay there. There are several steps you can use to vault yourself from bad to great.
What is Good/Bad Credit?
You have probably heard commercials or seen advertisements for “fixing bad credit” or getting “_____ interest rate if you have great credit,” but do you know what qualifies as “bad credit” or what number you need to have “good credit.”
In most cases anything over 700 will be labeled as “good.” At the other end, anything under 620 will be a bad score.
Know Where You Are – Check Your Credit
The first thing you should do is figure out where you are. If you don’t know your credit, who knows how much you need to improve it, how long it’s going to take, or if it’s even that bad.
Each of the three bureaus (TransUnion, Experian, and Equifax) will give you one free report every year.
All you have to do is go to their website and request your score. It’s simple. There is no reason you shouldn’t be getting at least three reports every year.
Technically, these are three different reports, but the info and scores are going to be very similar. Each of them are pulling the same info. There are going to be slightly different, but they will be in the same ballpark.
Another option for getting your credit score is to use other third-party companies, like Credit Karma.
All you have to do is create an account, enter some basic info (no credit card required), then they will spit out your VantageScore 3.0. This will give you your credit starting point, and help you establish a finish line.
Dispute Any Wrong Info
Even big fancy corporations can make mistakes. A lot of people see some mistakes on their credit report (another vital reason to track your credit).
Some of the common mistakes are duplicate credit accounts, accounts not being removed after being closed, or just plain incorrect info, like name or address.
In most cases, simply contacting the credit company can get those problems fixed in no time. GIve them copies of the errors with and they are required to investigate it within 30 days.
A similar tactic is to call your credit company and just ask them to forgive one of your late payments. You would be surprised the number of consumers who have been able to improve their scores by simply asking.
Create Rebuilding Steps
Now that you know where your credit score is and you’ve fixed any mistakes, now you can get into the nitty-gritty of fixing your credit.
You need to build a good, healthy credit score.
The first thing everyone should know is the importance of paying bills on time. Missing an electric bill, student loan, or mortgage payment is going to put a severe dent on your credit score. Before you can start picking your score up, you need to know the basics.
One way is to start chipping away at your debts. If you have a high debt ratio, your credit score will be less than perfect. If you lower how much debt you have, you’ll see your credit score slowly start to creep up.
Another good practice for credit repair is to have a mix of credit. The lenders and credit companies want to see you can manage all kinds of credit, not just credit cards.
The length of your credit accounts will also play into your overall score. A longer credit card account shows a consistency and responsibility to make payments on time.
If you have a young credit history, the best thing you can do is keep those accounts open and keep making the payments.
If you feel overwhelmed with trying to fix your credit, one option is to hire a professional to fix your credit. Before you go out and pay someone, there are things to consider.
One thing is to watch out for scammers. There are thousands of “credit repair specialists” out there, but most of them are going to take your check and then not do anything for you.
Before you give anyone money to fix your credit, make sure you do some digging. Do a quick Google search will show you everything you need to know about these “credit specialists.”
Your best bet is to use tried and trusts professionals who have years of experience. If you’re paying someone for a service as important as credit repair, you want to know you’re getting your money’s worth. Companies like Lexington Law have helped thousands of consumers fix their credit and get them back on track.
Repairing Your Credit
How long did it take you to wreck your credit into a giant twisted pile of late payments and maxed out cards? Probably didn’t happen in a week.
Well, here comes the bad news, you aren’t going to fix it in a day. It’s going to take some time. Make a plan, and stick to it. Before you know it, your scores going to be in the 700s.