Personal finance tips from the Finally Fast tips
Credit repair begins with you. Many people have bad credit and they don’t even know about it or they think they have no way to repair it. But before you take any steps to repair your credit, you need to know your credit score.
Your credit score is a 3-digit number, usually between 300 and 850, that lets lenders know how you are paying off your current debts and how much of a credit risk you may be to them. Your credit score is based on the information listed in your credit report, which contains a history of your past debts and repayments. Credit bureaus use computers and mathematical calculations to arrive at a particular credit score using all of the information contained in your credit report.
Each credit bureau uses different methods to do this, which is why you will have different scores with different companies, but most credit bureaus use the FICO system. FICO is an acronym for the widely used credit score calculating software offered to the credit bureaus by the Fair Isaac Corporation. Credit scores are often redder to as FICO scores or FICO ratings. Everyone has the right to see his or her credit reports and to repair this score.
One you have copies of your reports and know your scores, you can take the following steps:
Pay Your Bills On Time
This is the simplest step, and the most important. Your best bet is to set up automatic payments with all your creditors. If you can’t make a payment, call your creditor and make something work so that they won’t report it to the credit bureaus.
Increase Debt to Limit Ratio
There are two ways you can do this: keep your balances low or increase your limits. Always make sure your balances are below 35% if possible. Increasing your limits will help the ratio as long as you don’t increase your debt on those accounts too.
Diversify Your Credit
Unless you have a mortgage or car loan, you will need to start with the basics. First, get a checking account with your bank with a line of credit, and then get a credit card attached to your bank account. Finally, get a merchant store card.
Talk to Your Creditors
Creditors want their money too and they will negotiate to get it. Always talk to your creditors before paying off a bill. Use your leverage to negotiate the removal of the negative items upon final payment.
Dispute Negative Items
The main reason most people get denied loans is because of past negative items. The Fair Credit Reporting Act gives you the right to dispute any and all items on your credit reports that you feel classify as inaccurate, unverifiable, or misleading. If the bureaus cannot verify that the information on your reports is indeed correct, then those items must be deleted.
