How to Easily Repair Credit

Having a low credit score can significantly derail your attempt at securing loans with reasonable interest rates. If you have made bad financial decisions in the past by making late payments or you've had your car or other belongings repossessed by banks, you may find yourself with a below-average rating. Fortunately, you can take steps to improve your credit score. Though you will not see progress overnight, in time you should see your number tick up to an acceptable rate.

Instructions

1

Check your credit reports for errors. According to CBS News, over 80 percent of financial lenders use your FICO score in determining your loan specifications. This FICO score is figured by averaging your credit ratings from the three credit bureaus: TransUnion, Equifax and Experian. Obtain your credit report from the FICO website or another service. Study your reports and look for any errors, such as accounts opened in your name without your knowledge. Contact the specific reporting bureau in writing and detail the mistake or fraudulent activity. The company may take up to 30 days to respond to you regarding their decision to remove the erroneous items.

2

Downsize your credit card accounts. Check with your credit card companies to see if you can make balance transfers at low interest rates. Consolidate your cards so that you have the least number of payments possible. Look at your history with each company and close the newer accounts, but keep the older accounts open. Having long-standing relationships with credit companies reflects positively on your report.

3

Pay on time. The biggest factor in determining your FICO score is your payment history. Thirty-five percent of your rating is based on whether or not you pay on time, how many past-due accounts you have and how recently these problems occurred. Make a spreadsheet that lists all of your accounts, along with their due dates and payments required. Keep track of these payments and never assume that you have a grace period.

4

Pay higher balances down first. Your credit score is adversely affected by any account that has a balance due that is more than 35 percent of your limit. You should still make your minimum monthly payments on your lower accounts, but you should strategically pay more on these higher accounts, at least in the beginning of your process.