Your credit history is also a fundamental determinant of your overall score. Therefore, you should repair it appropriately. Your credit history is divided into categories basing on the data used to calculate your credit score. These categories can guide you to correct your credit history comprehensively enabling your credit repair process to be successful.
Check Your Credit Report Keenly
Begin your repairing process by thoroughly checking your credit report. This checking is meant to identify any errors that affect the score significantly. Ensure that there are no incorrectly listed late payments and all the amounts owed for every one of your open accounts is correct. In case you identify any errors, you should immediately raise a dispute with the credit bureau.
Set up Payment Reminders
Timely payments of your debts contribute significantly to your credit score. Some financing institutions send an email and text message reminders enabling you to make your payments on time. Though you can enroll in automatic payments debited from your bank account to avoid late payments, it does not show a sense of good money management skills on your behalf.
Reduce Amounts of Debts Owed
Achieving this feat is easier said than done. Nonetheless, reducing your debts gives you a sense of fulfillment more than it helps in your credit repair process. First, stop using your credit cards and check all your accounts to determine how much you owe and how much interest rate each of your accounts charges you. Come up with a plan that allocates more money to the accounts charging higher interest rates and maintain lesser payments on the other accounts.
Payment History Tips
In the past, there was no legitimate way to track down the consumers' credit activities. Nonetheless, the Fair Isaac Corporation designed a credit scoring system that is known as the FICO score. Since the three primary credit agencies have distinct information on each consumer, the FICO score calculated by these agencies are not equal. Payment history contributes up to 35% to your FICO score calculation. Though they have this significantly high percentage of effect to improving your score, past instances of missed and late payments are not fixed easily.
You can start your credit repair by making sure that your delinquent payments are made on time. If you had late payments, you should avoid any late payments in future to impact your score positively. The timely payments with time will neutralize the late payments since your good payment patterns will show that you have significantly improved your credit management strategies. Always remember that even if you pay off a collection account, it remains on your credit report for seven years. Whenever you encounter a financial crisis, contact your creditors and legitimate credit counselor to restructure your payments to suit your lower income comfortably.
The amounts of debts you owe contribute 30% of your total credit score calculation. This category can be cleaned more easily than payment history though it will require you to have strict financial discipline. Since high outstanding debt can take a toll on your credit score, you should keep all your credit cards and revolving credit balances low. Moreover, you should pay your revolving credit instead of moving it around.
You should never close your unused credit cards to raise your score quickly since having them same debt will be fewer open accounts may significantly your score. Also, you should not open new credit cards that you do not intend to use just to increase your available credit. Though it may seem like a brilliant idea, the strategy may backfire and lower your credit scores considerably.
Length of Credit History
Financial experts advise that if you have been managing your credit for just a short time, you should not open new accounts too rapidly. If you open new accounts, they lower your average account age and it significantly lowers your credit score considering that you do not have a lot of other credit information. Moreover, having a rapid account buildup makes you appear risky especially when you are a new credit user.
Always do your rate shopping in a restricted period since FICO scores differentiate between a search for a single loan and that of many new credit lines. To enhance your credit repair process in the long term, you can open new accounts in a responsible manner and pay them off on time. It is also advisable to order your credit report right from the credit reporting agency or from a consumer credit reports providing organizations that are authorized. Obtaining your report through any other way may affect your score.
In conclusion, you should fix errors in your credit score history to kick-start your credit repair process. Then, follow all the guidelines that will enable you to create and maintain consistent, good credit history. Nonetheless, to rebuild and raise your credit score, you will need patience and discipline.