Bad credit scores are not permanent. Many companies offer credit "repair" services at premium fees to attract consumers desperate to patch up their credit scores. However, there are a range of free strategies available to help you fix your credit. No legal strategy works overnight, but understanding the factors that influence your credit can help guarantee improvement in your score over time.
Monitor Your Usage
Creditors view responsible borrowing as using the amount of credit you can afford and repaying the balance as agreed. If you max out a credit card and pay the minimum balance only, you are not demonstrating your ability to responsibly manage credit. Keep your credit usage within amounts you can afford to pay back within a few billing cycles. Your consistent positive repayment history helps to improve your credit utilization ratio.
Credit Utilization Ratio
One of the major factors influencing your credit score is the amount of credit you owe versus the amount of credit available to you. You can fix you credit by working immediately to reduce your credit utilization ratio below 30 percent. Once your balance become low, your timely payments and reduced balances help to boost your score. The longer you keep your payments up, the more your score increases.
Length of Payment History
The financial burden of no credit is similar to the burden of bad credit. Consumers must demonstrate their ability to responsibly use credit over time to qualify for competitive interest rates and other credit based incentives. Keeping accounts open for a long period is a simple method of improving your credit score. When your account balances reach zero, keep the account open so you maintain the maximum you can in available credit.
Credit Report Errors
The information contained in your credit report influences your score. However, not all information in your credit report is correct. Requesting a copy of your credit report annually can help you keep track of information submitted to the credit bureaus. In the event you find an error, the Fair Credit Reporting Act states that the credit bureaus must drop the item immediately unless the creditor can provide documented proof.
Some credit bureaus offer credit monitoring services to alert you each time your credit score changes. You can use these services to learn which actions you take influence your credit score the most on a monthly basis.
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