How Quickly Can You Repair Your Credit Score? The Answer May Surprise You
(WatchDogReport.org) – People work tirelessly to maintain a good credit score, and for good reason. A good credit score makes life easier – it’s that simple. But, hard times fall upon everyone and it’s not always possible to keep up. If you’re asking how quickly you can repair your credit score, you’re probably in a tight situation.
There is no “quick fix” for your credit score. No matter what you hear on the radio or see on TV, the best way to repair your credit score is to make a plan and follow it through. With good practices and some time, your credit score will be working for you – rather than against you – once again.
Check Your Credit Report for Accuracy
You can’t repair your credit if you don’t know what’s on your credit report. All three of the credit reporting agencies, Equifax, Experian, and TransUnion, are required by law to provide you with a free copy of your credit report once a year. You can access the service at annualcreditreport.com.
Once you know what’s on your report, you can work to fix any inaccuracies. If you find anything such as an open account or collections that don’t belong, you can dispute it through the reporting agency’s online tool. Creditors want your credit file to be as accurate as possible, so anything that is genuinely wrong can typically be fixed with little effort.
What Should You Fix First?
The good news is the two most important factors that determine your credit score go hand-in-hand: your payment history and credit use ratio.
Payment History
The first item on the list for fixing your credit scores is your payment history. It accounts for more than a third of your score. When making a plan to repair your credit, this has to be at the top of your list. History is in the past, but you need to change the future. Making your payments on time, without fail, is the single most important factor in your credit file.
Credit Use Ratio
Your credit use ratio is the amount of revolving credit you have available versus the amount used. In other words, if you have $10,000 in available credit across all of your revolving accounts and you’ve used $5,000 of it, your credit use ratio is 50%. The ultimate goal for credit usage should be under 30%. Set a goal to pay your cards down and follow through, and your score will rise.
What About Consolidation Loans and Credit Repair Companies?
Once you have a solid payment history behind you, it may be time to consider a consolidation loan, which moves revolving credit usage from your debt ratio and puts it in a personal loan. The better your payment history, the lower your interest rate will be when you consolidate, so you may want to consider holding off until you have a better history under your belt.
Credit Repair companies can be useful if you have a lot of negative marks on your report you feel shouldn’t be there and need someone to help you get them removed. However, scrutinize the company you’re considering carefully. If they make grand promises, they’re probably too good to be true. After all, there’s little you can do to have legitimate negative information removed.
The most important thing your credit score needs is consistency – and time.
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