How To Fix Your Credit

Credit repair companies that help you fix your credit are a popular option during tough economic times

. However, many of the things that those companies will do for a fee can be done by you, for free, as recommended by the Federal Trade Commission. If you have been rejected for a loan or insurance, you have a right under the Fair Credit Reporting Act (FCRA) to request a free copy of your credit report.

The first step to fixing your credit record is verifying that all the information in the report is accurate. Your credit can get penalized by inaccurate information, and you have a right to request it being corrected by submitting a credit report dispute. This is especially important if you suspect you have been victim of identity theft. Once you are sure the information in the report is correct, you need to identify which are the causes affecting your credit, and take steps to solve them.

The first cause of low credit scores are late payments, collection accounts and charge-off. They will hurt your credit score more than any other factor. However, only accounts that are pending for more than 30 days are liable to hurt your credit score. The first thing to do to fix your credit is either paying them or arranging with your creditors for new credit lines and payment plans, to convince them to remove the charge-off and collection accounts from your credit report. They don't have to, but you may be able to negotiate with them to so do.

Your level of debt also affects your credit score badly, and this includes balances on credit cards. To fix your score, you should raise all your credit card balances until they are at around 30% of your credit limit. Your priority should be bringing those balances that are over-the-limit below your credit limits, and then focus on raising them all to a better credit-friendly level. Unpaid judgements and student loan defaults also hurt your credit score. In the first case, you will need to pay them to take them off your credit record. On the second case, you may be able to negotiate with your lender to see how to bring your student loan back to the current status.

If you need to fix your credit score after a bankruptcy or foreclosure, there's nothing you can do to repair that damage. Instead, your focus should be on rebuilding your credit, by showing that you are able to manage your credit. To do so, you will need to add a positive paying story, and that means having small amounts of credit and paying them every time they are due. A common way of doing so is by getting a credit card and making small purchases on it every month, paying your bill in full at the end of the period. If you cannot get approved for a credit card, you can apply for a secured credit card instead until your credit score improves.

Following those simple steps, you can fix a damaged credit rating in a few months, without paying any fees to a credit clinic company. And by changing your habits and reducing your debt levels you won't have to worry about it again.

by: Irene Lizarraga

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