How to Fix Credit Forever

When you need to fix something, that means you have broken something and it is in need of repair. When it is your credit that needs to be mended, you have broken the trust between yourself and your creditors. This kind of repair takes some time; trust cannot be repaired or replaced as quickly as a flat tire or faulty brake pads. In order to regain trust from your creditors you have to prove yourself.

Instructions

Fixing Your Credit Forever

1

Know what needs to be fixed. Before you can fix your credit forever, you need to know your financial mistakes. You can receive a copy of your credit report from all three of the major credit reporting agencies, Equifax, Experian or TransUnion, for free each year. According to the Federal Trade Commission, Annual Credit Report is the only authorized website where you can order a free copy of your credit report. See the Resources section for the link.

2

Correct inaccuracies. If you find any errors on your credit report, and you can prove that the information is inaccurate, you have the right under The Fair Credit Reporting Act, or FCRA, to dispute the erroneous information. The FCRA was created to provide privacy, accuracy and fairness to consumers in regard to credit reporting agencies. If you would like the directions on how to dispute inaccurate information on your credit report, see the Resources section.

3

Pay your bills on time and live within your means. If you are not current on your bills, pay them now. If you have late or outstanding fees, pay them. Do not charge anything on your credit cards that you cannot pay off when the bill arrives. Do this every month.

4

Become an expert on credit. In order to fix your credit forever, you need to educate yourself on what directly affects your credit report and your credit score. For example, your credit report consists of four crucial categories that are all controlled by you. The categories are as follows: your identification and your employment (past and present); payment history with creditors; inquiries, i.e. anyone who has requested your credit report in the last two years; and any adverse public records that you have, such as judgments or bankruptcies.

5

Know your credit score. After you have ensured that all of the information in your credit report is indeed accurate, you need to learn your credit score. Your credit score, also referred to as your FICO score, is a three-digit number that describes your creditworthiness. Your FICO score can range from 300 to 850; if you have a high score, you shouldn't have any problem fixing your credit forever. However, if you have a low score, fixing your credit may feel like it is taking forever. Whatever the score, it can eventually be done.

6

Learn the five FICO categories. FICO is actually an acronym for The Fair Isaac Corporation; (the company was the first to create a credit reporting system). Your FICO score is generated after calculating 5 specific categories that make up 100 percent of your score. For example, your payment history accounts for 35 percent; your credit utilization ratio accounts for 30 percent, (i.e. amount of money you owe creditors); length of your credit history is 15 percent; and your new credit and types of credit, both account for 10 percent. After you educate yourself on each of the categories that directly affect your FICO score, you will know the credit areas that need improving, as well as, the credit traps that you need to avoid. After you have financially disciplined yourself, you will be able to fix your credit forever.