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How to Fix Your Credit and Improve Your Credit Score

Writer's picture: Joeziel VazquezJoeziel Vazquez

Updated: Jan 19, 2024


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Introduction


Having a poor credit score can be a significant obstacle when it comes to achieving your financial goals. Whether you want to buy a new car, rent a nice apartment, or even purchase your dream home, a low credit score can hold you back. The good news is that there are steps you can take to fix your credit and improve your credit score. In this comprehensive guide, we will outline the strategies and actions you can implement to regain control of your credit and set yourself up for financial success.

Section 1: Check Your Credit Score and Report

To begin the process of fixing your credit, it's crucial to have an accurate understanding of your current credit situation. Start by checking your credit score and obtaining a copy of your credit report. Your credit report contains information about your credit history and is used to calculate your credit score. You can obtain a free credit report from each of the three major credit bureaus - Equifax, Experian, and TransUnion - once every 12 months at AnnualCreditReport.com or you can use a comprehensive all in one fintech platform like CredlocityIQ.com. Monitoring your credit score on a regular basis is also advisable, as it allows you to track your progress and identify any changes or improvements.

Section 2: Identify and Dispute Errors

While reviewing your credit report, it's essential to carefully examine the information for any errors or inaccuracies. According to a study by the Federal Trade Commission, a quarter of people had errors on their credit reports, and these errors could negatively impact their creditworthiness. If you spot any discrepancies, such as unrecognized accounts or incorrect payment information, you have the right to dispute these errors. Contact the relevant credit bureau and provide them with the necessary documentation to support your dispute. The credit bureau will investigate the matter and make the necessary corrections if the information is indeed inaccurate.

Section 3: Pay Your Bills on Time

One of the most significant factors influencing your credit score is your payment history. Late or missed payments can have a detrimental impact on your creditworthiness. Therefore, it's crucial to prioritize making timely payments for all of your financial obligations, including credit cards, loans, and utilities. Setting up automatic payments through your bank or creditor is an effective way to ensure that your bills are paid on time. If you encounter difficulty in paying your bills, it's recommended to contact the relevant office or creditor to discuss payment options or create a payment plan.

Section 4: Manage Your Credit Utilization Ratio

Section 5: Pay Down Debts

In addition to managing your credit card balances, it's essential to address any outstanding debts you may have. Paying down your debts not only improves your credit utilization ratio but also demonstrates your commitment to responsible financial management. Consider implementing the debt avalanche or debt snowball method to tackle your debts effectively. The debt avalanche method focuses on paying off high-interest debts first, while the debt snowball method involves paying off the smallest balances first. Choose the approach that aligns with your financial situation and goals.

Section 6: Keep Old Credit Cards Open

Closing old credit cards may seem like a logical step once you have paid off the balances. However, it's generally advisable to keep these accounts open, especially if they have a long credit history. Your credit history length contributes to 15% of your credit score, and a longer credit history is typically seen as favorable. It's important to note that some credit card issuers may close your account due to inactivity or if they charge an annual fee. Before making a decision, evaluate the potential impact on your credit score and weigh the benefits and drawbacks of keeping the account open.

Section 7: Be Cautious When Applying for New Credit

Each time you apply for new credit, it results in a hard inquiry on your credit report. Hard inquiries can temporarily lower your credit score by a few points. Therefore, it's important to be selective and intentional when applying for new credit. Only apply for credit when necessary, such as when you genuinely need a loan or credit card. Research and compare different options to increase your chances of approval and minimize the impact on your credit score.

Section 8: Consider Credit Repair Companies Carefully

Credit repair companies may promise to fix your credit and remove negative information from your credit report. However, it's important to approach these companies with caution. While they may offer assistance, their services often come at a significant cost. Instead, consider taking the necessary steps to repair your credit on your own. With the information provided in this guide, you can dispute errors, make timely payments, and manage your credit responsibly without incurring additional expenses.

Section 9: Time and Patience are Key

It's important to acknowledge that fixing your credit and improving your credit score is not an overnight process. It takes time and consistent effort to see significant results. Be patient and stay committed to the strategies outlined in this guide. Monitor your progress regularly and celebrate even small victories along the way. Remember, every positive action you take towards repairing your credit brings you one step closer to achieving your financial goals.

Section 10: Seek Professional Credit Counseling if Needed

If you find yourself overwhelmed or in need of additional guidance, consider seeking professional credit counseling. Reputable credit repair company like Credlocity. Credlocity not only offers quality full service credit repair but they are the only credit repair company who offers a free trial on all of their plans but also offers a 100% money back guarantee.

Conclusion

Fixing your credit and improving your credit score is a journey that requires dedication and perseverance. By checking your credit score and report, disputing errors, making timely payments, managing your credit utilization, paying down debts, and being cautious with new credit applications, you can take control of your credit and set yourself up for a brighter financial future. Remember, the key ingredients for success are patience, discipline, and a commitment to responsible financial management. With time and effort, you can achieve a better credit score and unlock new opportunities for financial success.

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Credlocity Business Group LLC is the parent company of Credlocity formerly known as Ficostar Credit Services and is in no way affiliated with FICO © 2020 Fair Isaac Corporation. FICO is a company that offers a credit scoring model called the FICO® Score. FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use borrowers' FICO scores along with other details on borrowers' credit reports to assess credit risk and determine whether to extend credit.

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