If you have poor credit, you will be happy to know that there are many things that you can do to boost your credit score. Some of these tips are simple while others are more complex. Some tips provide nearly immediate results while others take time, making it important to begin now.
However, all of these tips work and are good ways to go about repairing your credit and boosting your credit score.
1. Check Your Credit Report
If you check your credit report, chances are you will come across mistakes. Credit companies are not perfect and may mark a bill as “unpaid” when in fact it has been paid.
If you notice mistakes on your credit report, then notify your credit agency in writing.
The agency has 30 days to remove the mistake, after which you can take them to small claims court if they do not fix your report.
2. Deal with Back Taxes Immediately
If you owe back taxes to the IRS, do not try to get out from paying them. It does not work and will only mess up your credit.
Instead, contact the IRS and make a plan for paying the back taxes back on time.
You will have to pay an interest rate, but making such a plan will boost your credit ratings, as it will show that you are financially responsible.
3. Debt Consolidation
Debt consolidation is one of the best ways to fix your credit. If you have unpaid loans, then you will want to consolidate these and pay them off as fast as you can.
Consolidating payments involves negotiating with creditors and only paying back a small portion of the money owed.
However, debt consolidation must be done properly for it to have a positive impact on your credit score. It is very important for the creditor to mark the loan as “paid”, not “consolidated”.
If you need help in consolidating payments, then talk with a debt consolidation agency and get professional help.
Many people do not realize that taking out bad credit loans can actually boost their credit ratings. A person who has never taken out a loan will in fact not have a good credit score, as banks will not know if this person is a risky investment or not.
On the other hand, taking out a small loan and paying it back on time will do wonders for a person’s credit score.
You should do all you can to live within your means and not spend money you do not have. Payday loans should be avoided as they have extremely high interest rates.
However, taking out a mortgage loan, car loan or student loan can help to boost your credit score if you make sure the loan is manageable and make realistic plans for paying it back on time.
5. Credit Cards
No one needs a dozen or more credit cards.
In fact, the more cards you have, the more likely you are to spend money that you cannot pay. However, you should not shred all your cards. Instead, you should choose about four cards that you would like to keep.
These cards should have a low APR. Once you have chosen the cards that you would like to use, then work on closing credit card accounts with the companies that you will no longer be working with.
Spread out the account closure over a period of time, though, as closing all accounts at once can have a negative impact on your credit score.
If you have declared bankruptcy, you will find it very difficult to get a credit card.
However, you can often apply for and receive a store credit card. Using such a card wisely and paying the bills on time will, over time, boost your credit ratings.
6. Make a Budget
Making a budget will not have an immediate impact on your credit report. However, a budget will ensure that you are able to live within your means, pay your bills and manage expenses so that you are not running up high credit card bills.
You may not be able to buy what you want right when you want it, but having a budget will ensure that your credit score is high and you will avoid having to deal with debt collection agencies and angry creditors.
If you have a low credit score, then you will want to do all that you can to fix it. In some instances, you will need professional help.
You will want to work with a debt consolidation agency if you are unable to pay back your creditors and/or are being harassed by a debt collection agency.
Most of the time, you should be able to improve your credit score without professional help.
Be wise when taking out loans and choosing credit card expenses. Make a budget and stick to it. You should also check your credit reports for mistakes that could be lowering your score.
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