If you’re reading this, chances are that you have bad credit and you want to know how to fix it. You aren’t alone! It’s estimated that over one-third of Americans have credit scores in the bad or poor range, meaning they have credit scores under 600. While there are no quick fixes to fixing bad credit, if you follow these four steps to improve your credit, you can expect positive results!
1) Understand Why You Have Bad Credit
Your credit score is affected by dozens of factors. If you have bad credit, first things first—take a moment to get an understanding of why your score isn’t where it should be. A bad credit score could be a reflection of one big mistake or a whole lot of small ones. Take some time upfront to understand what caused your rating and how you can fix it to build better credit going forward. Fixing bad credit can seem like an intimidating and frustrating task, but there are concrete steps you can take today that will lead you toward success. Keep reading for some valuable information on how to fix bad credit over time.
2) Understand Your Options
The first step in fixing bad credit is understanding what options are available and what they will cost you. These days, there are some ways that you can get rid of your bad credit, but each option has its pros and cons. For example, while it’s relatively easy to dispute incorrect information on your credit report with one of the big credit bureaus—TransUnion, Experian, or Equifax—it won’t have an impact on your score for about 30 days. Depending on how severe your debt issues are, that could be too long for you to wait. Paying off delinquent accounts might seem like an obvious solution, but it can come with unexpected costs if it makes you unable to pay other bills because of interest payments and fees.
Debt consolidation, on the other hand, helps you pay off all your debts at once and potentially save money over time. But it also involves more red tape than most people want to deal with. So when choosing how to fix bad credit, think carefully about which method will work best for you.
3) Build Your Credibility
Your credit score is a black mark on your credibility. It’s pretty easy to check for mistakes and errors, but getting them corrected can be a long, drawn-out process. To fix bad credit in four simple steps follow these guidelines:
- Create a plan
- Negotiate with creditors
- Obtain new credit
- Stay committed to your plan.
The first thing you need when repairing bad credit is knowledge. These days many companies will help people rebuild their credit at a cost, but most of these companies do not provide much of a service other than filing bankruptcy for you (which is illegal). There are some things you can do yourself that will require little or no investment to get your bad credit fixed upright!
Once you’ve created a plan, it’s time to start fixing bad credit by negotiating with your creditors. This means contacting each creditor individually and offering payment plans they might find acceptable. Each creditor has its own set of rules and regulations they must adhere to when dealing with customers who have poor credit ratings. If you fail to make payments according to those rules, they have every right to take legal action against you including seizing assets such as bank accounts, garnishing wages, or suing for debts owed plus interest charges and collection fees!
4) Rebuild Your Credit Score
Your credit score is a number calculated from the information in your credit report. You can have bad credit due to too many late payments, not having enough available credit, or a debt-to-credit ratio. The quickest way to fix bad credit is by paying your debts on time and keeping your balances low. That alone may be enough for you to increase your score significantly for several months. However, if you find yourself still needing help after using these steps, you may want to consider additional measures such as debt consolidation or student loan refinancing that could make it easier for you to manage future payments and could earn you better interest rates on loans as well as savings on credit card fees.
A consultation with a credit counselor could also be helpful if you are struggling to get out of debt and maintain good financial habits. If possible, try not to fall behind on any bills while trying to rebuild your credit.