7 Tips For Repairing Your Own Credit Score

Credit Card User

Credit scores are very important. Their importance is well known to anyone who has ever sought credit for any reason. Loans, mortgages, and college educations all require good credit to obtain. Fortunately, repairing your own credit score is fairly straightforward if you follow the following tips:

1. Hire a reputable credit repair service

Whatever you do, if you decide to hire a credit repair service, make sure they have a good track record. Ask around and research their background before you sign up for their services.  Consumer credit repair agencies exist to provide credit fixing services to help individuals deal with the aftermath of financial issues that have affected a person’s ability to obtain fair and affordable credit. These agencies review a person’s history, identify negative items on their report, and work with creditors to have those items removed. While hiting a reputable credit repair agency can help repair your credit score, try to set this option aside and try to fix your credit score first.

2. Pay Bills Promptly

Owing money to someone can do significant damage to your credit score. If it isn’t paid back in a timely manner, the lender will report it as an outstanding debt on your behalf and add a late payment fee if it is not promptly fixed. This lowers your score significantly because the lender counts you as being more of a risk than before – especially if they were forced to pay interest on the principal amount owed while waiting on payment from you.

In order to have your bills paid on time, consider setting up automatic bill pay from a checking or savings account. You can set up most bills (rent, utilities, and subscriptions) this way and not worry about forgetting when the bill is due to be paid. Additionally, if you happen to miss a payment date, there is still enough time for you to remedy it before any fees are applied by the creditor.

3. Contact Creditors About Debts That Are Not Yours

A very common tactic of credit scammers is to apply for credit in someone else’s name. If their application is successful they will use that new entry on your credit report as an excuse not to pay any other debts they may owe – hence further damaging your credit score.

Some people think that if they are not notified about an account being opened in their name, then there is no point in getting it removed from their report. That isn’t true! You can get such accounts removed by hiring the services of a credit repair company and having them facilitate contacting the company and explaining the situation to them. Alternatively, you can do this step yourself.  The point here is that the more you argue your case, the less likely they will be to see any reason why they shouldn’t remove it from your credit file.

4. Don’t Apply For Too Much Credit At Once

Don’t apply for a new credit card and a car loan at the same time – even if you do have perfect credit and intend to pay both bills on time every time starting immediately after obtaining each one of them! If two lenders reject your application (for whatever reason) it will likely be seen as a sign that you are desperate for money and therefore may not be able to pay back any future debts. Two lenders rejecting your application is significant enough for creditors to take note of, but if four or five lenders do the same then this sends off red flags about your creditworthiness.

5. Don’t Pay Too Little On Your Credit Cards

Some people (for example students who barely earn enough money to make ends meet each month) believe that they should only ever pay the monthly minimum required by their credit card due to the high-interest rates charged on them by lending companies. Others (such as those trying to get rid of an existing balance faster than normal) may try transferring all of their balances to one credit card in order to smooth the payment process.

While doing either of these things may be worth considering, not paying any more than the minimum amount due to a creditor each month is a definite way of harming your credit score. Most bills should be paid in full as soon as possible and if you can’t afford to do it then you should avoid incurring debt until you have a higher income to support it.

6. Pay Bills On Time To Raise Your Score Quickly

In addition to recommending that people pay their bills on time, this tip makes the case for doing so even more strongly. Banks usually charge customers interest from the day they make a purchase on one of their credit cards. If those purchases are made later, (e.g. after 30 days of the due date) then they are likely to be charged interest on their purchases before they even see the money that was originally spent.

This means that customers who do not pay anything or only pay the minimum required by their bank will end up paying more for goods than they were initially quoted; increasing the amount of debt owed every month. Credit cards with high annual fees often come with an introductory discount rate (for example between 0% and 3%) which is only valid if a customer makes a purchase within a specific time period. They must therefore pay some kind of interest if they fail to meet this deadline – usually at a higher rate than the one advertised in-store or online when deciding whether or not to buy something on credit.

7. Be Cautious When Dealing With Debt Collectors

If you have recently fallen behind in your payments and creditors cannot contact you by phone or email then they will likely try contacting you through other means: such as letters, text messages, and even visits to your home. Some people may be tempted to record their debt collector’s calls in order to help them improve their score – but this is both illegal and something that will not be taken into consideration when deciding whether or not to lend money to an individual.

Credit BillFortunately, if you are having problems with your credit score it is easy for you to fix the problem yourself. However, before you do anything else you should first contact any creditors that are demanding money from you and ask them to wait until your score has improved again. If they refuse then offer to pay them what you can afford or be open about how much money you think that will need until everything is sorted out.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.