Having bad credit can be a real handicap. It can affect your ability to open new credit cards and get loans, such as mortgages and car loans. It also can make it harder to rent an apartment, and some employers will refuse to hire you. It can even hurt you when applying for insurance. Fortunately, there are ways to fix your credit score that can help you get back on track and improve your life.
The first step in repairing your credit is to review your credit reports from all three national consumer reporting agencies. Carefully examine the reports for errors, including accounts that don’t belong to you, missed payments that are actually late, and debts listed more than once. If you find any, dispute them with the credit bureau that provided the report. Follow the instructions on the report for doing so; you may need to provide documentation of what is wrong with your report.
Your payment history makes up 35% of your FICO credit score, and one of the fastest ways to improve it is to pay on time. Set up autopay on your bills (except for those that don’t permit it, such as your utilities) to ensure you never miss a payment. If you’re behind on a bill, try to work out a payment plan with the company before it goes into collections.
Another way to improve your credit score quickly is to reduce your utilization ratio, or how much you’re using of your available credit. Your credit card balances can have the biggest impact here, so paying them off—or keeping the balances low—can have a big effect on your credit score.
Lenders want to see you’re a reliable borrower, and having a good credit score can help them determine that. Having good credit can help you qualify for better mortgage and auto loan rates, and it can lower your interest rate. Having a good credit score can even lead to better job opportunities, and it can help you get health insurance. fix my credit score