How to fix your credit in one year

Dealing with a poor credit score doesn’t have to become a daily struggle, as it can be fixed with the aid of a few steps, and within a period of one year. Below we outlined how to go about fixing your credit in seven easy steps.

Bullet Points

  • Check credit reports for free
  • Dispute faulty information on credit reports
  • Deal with past due accounts and pay them off
  • Rebuild your credit score using a secured credit card
  • Create a plan to make payments on time
  • Do not max out available credit
  • Use rent payments to improve your credit score

Check Credit Reports

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Checking a credit report should be the first thing you do, as it is the basis of rectifying bad credit. All you need to do is go to a website owned by a credit union like Equifax or TransUnion and request a report. Each of these agencies even provides a free report once a year, so make use of them. An excellent credit score ranges between 800-850, while getting between 760-799 is what you should aim for if you have a low score currently.

Understand Negative Information and Combat Faulty Reporting

If you have bad credit you can expect to see it reflected in your score in the form of negative information, and sometimes this can be faulty so ensure that you file a dispute to get them removed. A credit score (FICO) is made up of smaller portions of information, so if you do not dispute a payment which is listed as late when in fact it wasn’t your score will be reduced.

Immediately Address Past Due Accounts

Ensure you deal with past due accounts and pay them off or ensure that you have a payment plan in place so their status is changed to “current”. Dealing with past due accounts allows you to avoid a “charge-off” status which is applied when your payments are late and pass the 180 day mark.

Get a Credit Card against a Deposit

Even if you are finding it difficult to get a credit card because of a low credit score you can get one against a deposit of money in the bank. With a credit limit on the card equivalent to the amount you deposited, you can pay dues in time and use it to rebuild your credit score.

Create a Plan to Make Payments on Time

Take the struggle out of keeping up with payments for loans, by making a payment plan. With a plan in place you can make payments even a little late as long as they do not cross the 30 day mark which is when they start to adversely affect credit scores.

Do not Max out Available Credit

If you are eligible for a certain amount of credit, ensure you do not utilize more than 30%, but if you are already above it, take steps to bring it down.

Keep an Eye on your Credit score and Improve It

Access your credit reports regularly and check them for wrong information so that they do not adversely impact your score. In case you pay rent through an electronic service, you can improve your credit score with each payment by opting to have them reported to the credit bureau.

Adopt good habits such as regularly paying off debt on a credit card and minimizing interest, which will go a long way towards taking your credit score above 760 within a year.