If you’ve seen advertisements that say you can repair your own credit, be aware that the statement is only true to a point, and it’s often not as simple as it’s made out to sound, but some of it can be done. There are things that you can do to start improving your credit rating, and those things will make it more acceptable to a lender at a later date when you decide that you want to borrow money and your credit has to be checked. The first step, therefore, is to know what’s on your credit report and why it’s there, because you can’t work at improving your credit if you don’t even know what it looks like right now.
Step two is to look at your credit reports (TransUnion, Experian, and Equifax all offer them, so get one from all three bureaus, since they can be different depending on how a company you’ve had dealings with reports things) and compare them to see if they match up. If you find that they don’t all match like they should, some of the problem with your credit could be that there are things on your credit report that don’t match with what’s true and accurate regarding your credit history. When you find things like this you should contact the credit bureau and ask to have them remove those items, which they will do if they investigate and find that those items aren’t yours -they are obligated to investigate any legitimate claim that’s not obviously frivolous – and once the items are removed they’ll send you a corrected credit report.
Step three involves how many active credit accounts you really have, since having a good credit score requires at least three active accounts. When someone only has one or two accounts, especially if those accounts are only credit cards and not longer-standing accounts like vehicle loans or mortgages, it doesn’t show a strong history of being able to handle credit properly. You can get more accounts if you don’t have enough to have a great credit rating, but you should be careful doing that, since getting too many accounts too quickly can harm your credit – and that’s especially true if those accounts are just credit cards.
Step four is a crucial one if you know someone who has good credit and who trusts you, because it’s not a step that you can do on your own. What you want to do here is get that trusted person to add you as an authorized user on their credit cards without actually giving you the card to use – that way you won’t be spending or adding up debt, but you will be getting the benefit of their good credit added to your credit report. Only do this with a person who has had the card for at least two years and who has not been late with a payment, though, because their credit problems with that card would also attach to your report, as well.
In step five, you have to start paying down your debt, because having high balances on things will really hurt you in the long run – it makes you look irresponsible. Your credit card debt, for example, should be no more than 30% of the amount that you’re actually allowed to borrow on your credit cards, but even if you can’t get them to that point work to get them down below 50% of the available credit. Having balances that are low and that stay low means that your lenders will see that you’re taking good care of the credit you’ve been offered, so you’ll have a better chance of getting even more credit.
Step six is to not close out your credit accounts just because you’ve paid them off, since open, properly-paid accounts help to build good credit. If you close them out and get rid of them you’ll find that your credit score might actually drop off a bit because you aren’t able to get any more ‘good credit points’ from those companies anymore. There are some accounts, though, that will automatically close when paid, like car loans and mortgages – but leave those newly-paid-off credit cards open.
Step seven is the easiest one: maintain what you’ve done and are doing to keep your credit score high by making sure things get paid on time. Don’t start adding up a bunch of new debt once you’ve gotten rid of the old debt, and you’ll soon see that your credit score will stay high, allowing you to get the credit that you need when you need it. If you only get and use credit when you need it, and you don’t overextend yourself, you’ll have a much better chance of keeping a great credit score for years to come and being able to buy what you need without worrying that you won’t qualify for any kind of low-interest credit.