Raising Your Credit Score Wisely
Rebuilding credit can be a rather tricky business, especially when you are trying to rebuild it from scratch. Many Americans deal with the struggles of having bad credit scores, because it actually affects many aspects of your life. If you haven’t thought about your credit score before, you may not realize what it could do to you. For a few examples, you may get denied quite frequently for car loans from financial auto lenders, denied for things such as phone calling and texting plans, and even being allowed to lease an apartment or home.
Trying to deal with getting around your credit score to get the things you want is possible, but it can be quite a difficult process. For one thing, if you get approval for something such as a car loan, you may face extremely high interest rates compared to people who have average or good credit scores. It would also be a longer process, as you may have to gather a lot more things and put in much more effort for one item instead of being able to easily get it than a person with an average or good credit score.
Thankfully, you don’t have to lay back and suffer the effects that a bad credit score would do to you. There are many ways you can learn how to rebuild credit to be able to raise your score. Keep in mind that you have to do some of these tips quite regularly if you want to see results. You should never expect your credit score to shoot up overnight, as it can take a year or even several years until you can improve your credit score, especially if it was very low. You have to be patient and focus on the goal. That way, you will have a much better future because you will be able to access more things with your good credit score. Here are some ways you can start your journey to rebuild credit from scratch.
- Go To A Credit Repair Company. There are many companies that offer services to people to help them fix their credit. These companies are pretty straightforward with what they do. What they do is that they look for errors that may be in your credit reports to know what should be taken out. How they do that is that they will pull out your credit reports from three credit agencies, as that amount will help them spot the mistakes that may have been reported to the credit bureau. Afterwards, they will compare and see what things don’t match or were wrongly placed into your credit report, they may even try to mark it as a mistake depending on the situation that you were in that caused you to have a credit error on your report.
However, just because they spot the mistakes doesn’t mean that they will be wipe out the error on their own. The next step will be to file a formal complaint or dispute to the credit bureau. They will try their best to get rid of the mistake by discussing or having a “dispute” with the people at the credit bureau. Generally, this process won’t take too long. Generally it should be done in just a month, but certain cases may take up to as long as a month and a half. You have to keep in mind that it will vary on how many errors you have and how complicated your credit situation may be.
If the services were able to win at the dispute, that error will be cleared from your credit scores. However, you have to keep in mind that removing a few errors won’t drastically improve your credit score and you may not even see the results right away. This is why you should never trust a credit repair company that guarantees you instant and amazing results from their work, as it is actually illegal to say that because it will never be sure due to people have varying credit situations. Additionally, you should walk away from a credit repair company that asks you to pay them before they have done their services, as they may be trying to scam you into giving them your personal information which can lead to identity theft.
Be sure to do your research and find a good, reliable credit repair company if you want the services to be done. Of course, there are times where you can do your own credit repair by being the one to pull the reports and spot the mistakes. However, you have to be well prepared to file the dispute and state why you believe it is an error to the people at the credit bureau. You can most certainly do that if you only got a few errors in your credit report. But if you have a rather overwhelming amount, we recommend that you go for a company’s service instead. With that in mind, if a company has already offered you a consultation and said that you only have an error or two but demand that it would be best to still get their services, you should not work with them because other companies will state that you can get it done with or without them.
The key to most of the rebuilding credit tips will involve a lot of patience. The good thing about credit repair companies is that they will take away all of the hassle and stress for you, but you will still have to wait patiently. Although as we stated earlier, you may not see big results once the wait is done. This is why we recommend that you combine the tips above to get the best results when you rebuild your credit from scratch. Here are some more ways you can start repairing your credit.
- Check Out Your Credit Report. Now you may have already found the errors on your credit report and you may be trying to find ways as to how you can remove those errors, but what about the ones that aren’t errors? Take a look at your credit report and see what the causes of your bad credit area. More often that not, our bad credit scores could be caused by our own negligence and bad habits. This is why it is important that you look at your credit report, that way you will know exactly where you should start and what to do for the next step.
- Break the Nasty Financial Habits. Are your credit card balances starting to look overwhelming? If this is the case and you got lots of other debt, then you already know what needs to be done. You have to start adjusting and budgeting properly to be able to remove all of that debt. It won’t be easy, but it is one of the best ways to start rebuilding your credit, and more importantly to keep it from getting any higher.
Try to clear out as much debt as you can, especially from your credit card accounts. Many people recommend that you keep credit card balances below 30%, but of course it would be better if you could aim for something lower than that. To add to that, you should avoid trying to use multiple credit cards for one item. If you charge multiple credit cards for a single purchase, you could be making your credit score even lower, so try to stick to a single credit card as much as possible. Moreover, try to steer away from any large and unnecessary purchases with your credit cards so you can focus on paying off your debt and getting those balances as low as possible.
However with that in mind, it would be best to keep your accounts active and do not close them. Even if they didn’t have the best history in the past, your credit history would look much better if you have had it for a long time. Although, this option is not always possible for everyone, because some people may be placed in a position where they will have to close it. However, if you are in a position where you can keep it and have been able to clear out enough balances from it, you should definitely keep it.
Adding to the topic of credit cards, you should try to get a secured credit card. You may be a bit confused at first, because why should a person add another credit card into their lives when they’re trying to pay off their other credit card balances? Well, the idea behind this is actually quite simple. Using a secured credit card is one of the most followed tips for people to learn how to rebuild credit.
For one thing, it is rather easy for people with low credit scores to be able to get a secured credit card, especially if you compare it to trying to qualify for a traditional credit card. Keep in mind that the catch of this is that a savings account will be linked to your credit card and it will be placed as a collateral, but that is why it is rather easy to get approved for this kind of credit card. If you use your new credit card and show the credit bureaus that you are paying things on time and in full, it will look great on your credit reports.
Now, let’s say that you are a bit overwhelmed with the amount of debt that you have and it will take a long time for you to get it cleared. You can opt to get a loan such as a personal loan to be able to clear it all at once, and that way you will be able to focus on repaying one loan. The key here is to find a lender who understands what you are going through and wants to help you, so you ought to look around for a good loan plan with reasonable interest rates involved. You may have better luck at getting approval if you apply for a personal loan from a lender that specializes on loans for people with bad credit.
Now that you have found a way to clear your debt and learned about secured credit cards, you have to stick with those efforts so that they don’t go to waste. One of the most important things that you should adhere to is to stick to good financial habits to keep yourself on track to rebuild your credit from scratch. You don’t want to waste all that time and efforts just because you fell back on your old bad habits.
For starters, you have to make it a point to put aside money each month for your bills and other dues and pay for them as soon as possible. You will want to avoid paying for anything late and not paying in full, or even worse skip on a bill or payment altogether. Try to set up reminders on your phone and around your house about when you should pay the bills and make sure that you ingrain your financial responsibilities into your brain.
You will want to make sure that you are slowly and steadily making these habits a part of your lifestyle. Don’t let yourself get stopped just by paying your bills on time each month. Try to live realistically within your salary and other forms of income each month. Learn how to set aside money for things like a savings account, an emergency fund, and a retirement account. Not only will this be a part of your new financial habit and plan, but you will have the peace of mind that you will be prepared in case of an emergency.
We need to emphasize that you make sure that you are paying for your bills on time. Payment history plays a very crucial part on getting a better credit score. In fact, your payment history affects about 30% of what your credit score would be! So be sure to religiously practice good financial habits to help you reach your goal of having a good credit score. Don’t forget about getting rid of that debt too, because it also accounts for 30% of your credit score.
- Don’t Obsess and Focus too Much on It. Now this tip may be confusing because we just told you how important it is to focus on your new financial lifestyle. but you also need to learn how to relax. It’s good to get good new habits, but you shouldn’t catch yourself checking your credit reports every single day. You won’t see any changes in your credit score from a month to three months until you start putting effort into rebuilding it, and if you had a very bad credit situation it could even take several years! You need to just focus on the small things that you are doing now, like paying your bills on time, and relax, because obsessing over it won’t make your score get any higher.
Try to find a healthy balance that won’t make you cross the line of obsession. You can keep a calendar and mark a date every month or so as to when you should check on your credit score. The idea of this tip is to make sure that you aren’t focusing on the score itself, but rather on the process on rebuilding it. The score won’t get higher instantly, but your efforts and progress will definitely pay off, so just practice good financial habits and pay your debts instead.
Once you have gotten a good or average fair credit score, you will be able to get the things that you want and need! Moreover, if you get the score that you need and keep the good habits that we talked about above, you may find yourself with an excellent credit score of 700-850 in the future if you keep it up! Just be patient, make a schedule, and stay focused and you will be on the right track towards having access to more things in life thanks to a good credit score.