There are many tips and hints available for fixing credit score problems. Unfortunately, if you aren’t quite sure what you’re doing, you could potentially make your issues worse instead of better. Understanding how your credit score works isn’t difficult. The Credit Reporting Bureaus put together a summary of your borrowing history, your debt levels, the types of credit you have and your repayment history, which is then calculated to give a score. Lenders and banks access your score to determine how you’ve managed your financial obligations and responsibilities in the past. A higher score tells them you’re likely to be a good paying customer, while a lower score tells them that you’ve had some financial difficulties in the past. If you need to work on fixing credit score problems, here are some easy tips that can help to boost your score.
1. Order a Free Copy of your Credit Score
Before you begin working on fixing your credit score, you first need to know what it looks like today. Order a free copy of your credit score from all three Credit Reporting Agencies. You’ll find that there can sometimes be a discrepancy in your total credit score between each agency. When the report arrives, read through the listings carefully. You should notice that any credit inquiries you’ve made in the last few years are shown there, along with any missed payments, defaults, judgments, liens or any other issues you might have had. Once you have a clear idea of what is affecting your current credit score, you’re in a stronger position to work on fixing any problems.
2. Remove Incorrect Listings
If you notice any listings on your credit report that don’t belong to you or any listings that should have been removed, make a careful note of them. Incorrect listings can be disputed and if the Credit Reporting Bureau can’t verify your claim, the listing will be removed. You should be looking for entries that weren’t made by you. These can include listings for people with similar names to your own or listings made fraudulently by someone using your identity. You should also look for any listings marked ‘unpaid’ or ‘past due’ by the lender that you know you have paid in full. These can be amended by your creditors easily once you’ve verified that the account has really been paid.
3. Clear Up Past Due Debts
Once you fall behind on repayments it can be difficult to catch up again. Unfortunately this creates a negative spiral where your lender may be charging you penalty interest rates and live skor overdue fees, which make it even harder to catch up. If you’re serious about fixing credit score problems, then you’ll need to look into ways to catch up those past due debts and pay off debts as soon as possible. You might consider a debt consolidation loan or a balance transfer credit card that offers a lower rate than you’re paying now to clear those old debts. If you don’t qualify for these options, then you may need to negotiate a realistic payment plan with your lender to help you get back in front.
4. Negotiate a Payment Plan
If you have no way of raising enough cash to clear any overdue payments, call your creditors immediately and negotiate a payment plan. Where possible, try to make sure your payment plan is realistic and that you can afford to keep up with the amounts you’ve agreed to pay. While you’re talking to your creditors, it can’t hurt to ask if they’re willing to negotiate a lower interest rate with you, or perhaps an adjustment on the penalty fees and charges you’re paying. Once you’ve set a payment plan that is designed to pay off the overdue amount, be sure to add even small amounts extra on top of the payment due. Even an extra $5 per month can have a huge benefit to putting you back in front. When you’re past due payments are caught up, call your lender again and ask them to amend the negative listing they placed on your credit report. A paid default listing is far preferable to an unpaid debt listing.