Many people in the world today have bad credit or low credit scores that are in need of repair. This could be because of medical bills with no insurance, divorce, credit cards, or many other reasons. No matter how your credit score has become bad or low, you should try to repair it as soon as possible. Having bad credit will make it hard for you to get any type of loans or credit cards without paying high interest rates.
Tip One: Get Copies of Credit Reports
The first thing to repair bad credit is to get a copy of your credit report from all three major credit reporting agencies: Experian, Transunion, and Equifax. This can be done online, usually for free. On the credit reports will be listed all of your credit accounts, both good and bad. The bad ones are the ones to look closely at.
Are any of them incorrect? Does it say an account is still open when it is closed? Does it say you have not paid when you have?
Tip Two: Dispute Incorrect Information
If there is any incorrect information on your credit reports, you must right to the credit reporting company to dispute the bills. You may also contact the company that holds the debt – either the original company that issued the credit or any debt collection agency that may have bought it.
Tip Three: Pay off All Bills
For any debt that cannot be disputed, you must pay off all your bills. There may be a possibility that you can negotiate a settlement that is lower than the entire bill or a payment plan.
Tip Three Alternate: Declare Bankruptcy
If you simply cannot pay your bills, you might want to consider bankruptcy. New bankruptcy laws require that you actually have a very low income, and attend debt-counseling classes before you can declare bankruptcy.
Tip Four: Wait
Bad debt will usually drop off your credit report in seven years. Bankruptcy takes ten years to leave your credit report. That does not mean your credit score gets automatically better after that time, just that the causes are not listed.
The more time you can put between bad debt and trying to get more credit, the better. The better thing to do, however, is to get some good credit references during that time.
Tip Five: Get New Credit Accounts Responsibly
With a past history of bad credit that was creating by past due bills, it will be more difficult for you to get any additional lines of credit. Store or gas station credit cards are usually easier to get than major Visas and Mastercards. If your credit score is very low, you might have to get a secured credit card or a prepaid debit card. You must make sure that you use new credit responsibly, and that the credit line reports to all three credit reporting agencies. This will set you on the path to better credit quickly.
Repairing bad credit is an important part of being financially responsible. You need to raise your credit score as much as possible to get a mortgage, a car or home loan, or any other lines of credit. If you follow these simple tips, you should be able to raise your bad credit score. The most important tip is this: make sure you never get into the bad credit trap again!