Credit Repair

what is a credit score?

Your credit score plays an important role in your financials. Your credit score determines the kind of credit options that are available to you. Some lenders only offer loans to borrowers with high credit scores. Some lenders also offer credit to people with low credit scores but the APR is usually high.
high credit score
In a general sense, people with high credit scores are considered to be creditworthy. They have more loan options and the APRs on the loans available to them are also lower. Your credit score can also impact your insurance premium. A good credit score can reduce the insurance premium you pay monthly. All these mean that a good credit score saves you some cash.
bad credit score
A bad credit score can leave you in a vulnerable situation. You may not be able to access that loan you really need because of your credit score. if you have a bad credit score, it is about time you do something about it. Fortunately, you can improve your credit score through a credit repair process. These processes take time and commitment but they are worth it.
how to repair your credit score?
When you want to repair your credit you have two options. You can choose to do it yourself or get the services of a professional credit repair company. If you choose to do it yourself, here is how you can go about it.

Check Your Credit Report
The first step is to check all three credit reports (Equifax, TransUnion, Experian). You can access a free copy of all three reports from creditreport.com. It is important to review all three reports because the information on the reports is usually different. Information reported on one may not be reported on the other two. When you get the reports, you should first check if all your personal information is correct. You should also confirm if you can recognize all the accounts on your report. It is important to recognize all of them because of cases identity theft. If you do not recognize them, you should file a dispute. Sometimes, criminals take advantage of people and take credit with their identity. They do not pay back the credit they took; you may also not know about it until you are denied credit or employment.You should also make sure that negative items such as missed payments, bankruptcies, and collections are accurate. If you find an error in any of these or if you realize that an item that is due for removal from your report is still on the report, file a dispute. Items that may be due for removal include bankruptcies. Bankruptcies are supposed to stay on your account for 7 years (10 years in some cases). If the period elapses but it is still on your credit report, you should file for it to be removed.
Filing a Dispute
You can file a dispute online by logging into the credit reporting agency’s website. You can also send a mail to the agency. It is advised that you file the report by mail since that has proven to be more effective. When you want to file a dispute, you should submit a certified letter to the agency. The letter should clearly describe the error. You should also submit any document that can support your claim. When you file a dispute, the credit reporting company has up to 45 days to respond. In most cases, they respond within 30 days. The credit reporting company will investigate your claim. The information provider will be contacted to prove the accuracy of the information they provided. If they admit that there is an error in the information, it will be corrected. You will then receive a free copy of your credit report with the corrections. You can request that the credit reporting agency send your corrected report to all institutions that accessed your credit report within the last six months.
Pay Down Your Balances
Reducing your debts is another way of improving your credit score. When you pay your debt, you will be able to improve your credit score. It will be challenging when you try to pay down your balances but it is worth. You should first pay debts that you have defaulted on. You should also concentrate on high-interest loans. Some loans affect your credit score more than others. Medical loans do not weigh on your credit score as much as other loans. If you have a medical loan, you can settle other debts first. Another thing to look at is your credit card balances. Try to pay down the cards that are almost maxed out. When you paying down your credit card balances, it is advisable to make more than one payment in a month. This tactic will help improve your credit score. Paying down your balance can improve your credit utilization ratio. Credit utilization rate is the ratio of your debt to your total credit available. Ideally, your credit utilization ratio should be less than 30%. A ratio below this percentage will have a positive impact on your credit report. Whiles, you are paying down your balance, you can also consider raising your credit limit. This depends on your credit card company. You can write to them requesting an increase in your credit limit. If they agree to increase it, that is great. If you succeed in raising your credit limit, your credit utilization ratio will go down because the percentage of your debts to your credit limit will now be lower than before. You may be tempted to spend more since your credit limit has been increased, however, refrain from spending more. Spending more will only increase your ratio again.
Do not accumulate more debt
This is another important step in your credit repair journey. When you want to repair your credit, avoid luxury spending. You should cut down on your regular visits to that fancy restaurant, and also avoid impulse buying. At this point, you should only buy the items you need. The fact that you find an item attractive does not mean you should get it. Some people even take extreme measures to cut down on spending. They go as far as freezing their credit cards so that they do not use it. At this point, drawing a budget and sticking to it is important. Your budget should feature your necessities, however, leave a little room for unforeseen circumstances.
Be an Authorized User
You can also benefit from the financial standing of a relative. You can discuss with someone you trust so that the person can make you an authorized user of his or her cards. Once the person makes you an authorized user, your credit limits will increase and that will reflect positively on your credit report. You should, however, note that, when the person misses payments or stops making payments for his or her loan, it will affect your credit score. Although this is a good way of improving your credit score, it is difficult to get people to accept to do this. This is because, when your credit score suffers negatively, it will affect that person as well.
Consolidate your Debt
You should not consider this option unless you are sure that you cannot repay your debts. Consolidating your debts allows you to combine all your high-interest loans into one loan. the lender who will consolidate the loan will either offer you a personal loan to repay your loans or they will settle the debt on your behalf. When this is done, you will now make a single monthly payment to the new lender. Although debt consolidation is a great way to repay your loan when you are experiencing difficulty, it can also keep you in debt for a longer period. Sometimes, the interest rate on the new loan may be low but the fees may swallow up all that you have to save on interest rates through the consolidation.

This is why it is important to do your calculations before opting for a loan consolidation. The aim of loan consolidation is to reduce the monthly payments and make it easier for you to repay your loan. If you are able to consolidate your loan, make sure that you make consistent monthly payments to help you clear the loan faster.

When you are repairing your credit, it is important to keep track of the changes in your credit score. Although the changes will take some time to reflect in your score, try to follow up and see the progress made.

You should also have in mind that credit repair is not a quick process. It takes a minimum for six months. Even if you are not seeing changes, you will need to continue the process. It will pay off soon enough.