Learn more about what the banks are looking for below in Credit Score 101 where we discuss how to improve FICO scores and three essential things you can do right now.
How to repair my credit and improve my FICO Scores
It's important to note that repairing bad credit is a bit like losing weight: It takes time, and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit rating, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. The best advice for rebuilding credit is to manage it responsibly over time. If you haven't done that, then you need to repair your credit history before you see credit score improvement. The tips below will help you do that. We've divided them into categories based on data used to calculate your credit score.
3 Important Things You Can Do Right Now
1. Check Your Credit Report – Credit score repair begins with your credit report. If you haven't already done so, you want to start by requesting a free copy of your credit report to check it for errors. Your credit report contains the data used to calculate your credit score, and it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts are correct. If you find errors on any of your reports, dispute them with the credit bureau. Read more about Disputing Errors on Your Credit Report
2. Setup Payment Reminders – Making your credit payments on time is one of the biggest contributing factors to your credit scores. Some banks offer payment reminders through their online banking portals. They send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card or loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instill a sense of money management.
3. Reduce the Amount of Debt You Owe – This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.
More Tips on How to Fix a Credit Score & Maintain Good Credit Payment History
Contributing 35% to a FICO Score calculation, this category has the greatest effect on improving your scores, but past problems like missed or late payments are not easily fixed. Follow these tips:
- Pay your bills on time. Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO Scores.
- If you have missed payments, get current and stay current. The longer you pay your bills on time after being late, the more your FICO Scores should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your FICO Score fades as time passes as recent good payment patterns show up on your credit report. And good FICO Scores weigh any credit problems against the positive information that says you're managing your credit well.
- Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.
- If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO Scores.
- Keep tabs on your credit rating; credit score requirements can change without notice adversely affecting your credit score.
Fiscal responsibility is NOT something we were taught in school, and our parents did not have to tools we have at our disposal today. Use today's tools to monitor and improve your rating so when the banks do go looking they see a strong credit score. Learn more about the Author Kerin Clarkin in 813 Spotlight | Kerin Clarkin Tampa South Shore Realty.