If you have a bad credit score, it can be very hard to get credit. If you need a loan to buy a car, a home or a major appliance, having bad credit can seriously impact your lifestyle. You may also end up paying higher interest rates. Although repairing your credit score takes some work, and can take some time, it can be done. It isn’t necessary to pay money to fix your credit score. All you have to do is get back on track and start paying your bills on time.
The first thing you must do to repair your credit score is to visit AnnualCreditReport.com. This website allows you to request a free copy of your credit report from TransUnion, Equifax and Experian. You’ll have to enter some personally identifying information, such as your name and Social Security number. However, you don’t have to worry about identity theft; this is a safe and secure website. After you get your credit reports, look over them for anything that’s incorrect or out of date. Contact each credit reporting agency individually to ask them to remove the incorrect data. Make sure to save or print a copy of the free credit reports for your records.
You can also get your credit score from the three major credit reporting agencies. You’ll have to pay a small fee to get the score, but it will be worth it to know exactly where you stand. For example, if your credit score is 620 or over, your credit is far from good, but you will still be able to qualify for a loan from certain lenders.
Create a budget and outline all the bills you have to pay each month. Write them down in a notebook along with the due date and check it each month to make sure you pay your bills on time. Also, try to cut back on the amount that you spend. Don’t shop for fun or as a habit. Curtail your restaurant and movie expenses. Drop expensive cable and satellite TV service and cell phone bills. Call the insurance companies that provide your health, auto and home insurance to make sure you’re getting the best deal. If you’re not, ask your insurance company to reduce your coverage to eliminate unnecessary protection.
When you’ve freed up some extra money, start paying down your debt, especially high interest credit card debt. Pay down the highest interest debt if possible. However, if the highest interest debt is too large to pay off quickly, you may do better to pay off a smaller, lower interest debt first to free up the monthly payment. You can then put that payment toward the higher interest debt. Once your debt has been reduced, your credit score will automatically increase, since the score is based partly on the the amount of credit you have available, as well as your debt to income ratio.
Be wary of credit consolidation offers. They can turn into a nightmare, because credit consolidation companies often take consumers’ money, then fail to pay their bills on time. However, if you can get a lower interest loan or balance transfer option at a lower interest rate, take advantage of the offer to reduce your interest rate.
For more information on repairing bad credit, visit the FTC.gov website.