How To Repair Your Credit Report

A poor credit score can be very damaging to an individual in a number of different situations. Poor credit can result in an individual being denied a loan for a car, a home or any other purpose. Even when low credit scores do not result in the individual being denied these loans, they may result in the individual receiving unfavorable loan terms such as high interest rates. Additionally, poor credit scores can also result in an individual having an application for a rental agreement denied. This is because both financial institutions granting loans and leasing agents renting out apartments and homes want to be reasonably sure the individual will be able to repay the loan or pay the rent in a timely fashion and may not be willing to take a risk on individuals with poor credit. Fortunately, there are steps you can take to repair your credit:

  1. Review your credit reports annually. This should always be the first step because it will give the individual an accurate account of how poor the credit rating actually is. Individuals are entitled to receive one free credit report from each of the credit reporting bureaus each year. This includes Equifax, Trans Union and Experian. All of the information in each of these reports should be reviewed carefully to ensure there are no inaccuracies which are reflecting negatively on the credit score.

  2. If any inaccuracies are detected on the credit reports, the individual should contact the bureau immediately and notify them of these discrepancies. The individual should also provide as much information regarding the mistake as possible. The credit bureau is then obligated to investigate these charges to determine whether or not they are valid and may remove the item if it is deemed to be a mistake. If the credit bureau is not able to resolve the problem, you may submit a brief written statement explaining the situation and this statement will appear on your credit report.
  3. Items on a credit report which negatively affect the individual's credit rating and are not mistakes can be more difficult, but not impossible, to correct. The following steps can help you to set yourself on the path of improving your credit score:

    1. Set a budget and stick to it. An individual with poor credit who is attempting to redeem his credit should set a budget which focuses on repaying debts as quickly as possible and paying all bills on time in the future. This may mean the individual has to cut a few nonessential items out of his budget in order to focus on items which can help him to improve his credit score.

    2. Do not open any unnecessary accounts. Store credit cards are one example of this type of account. Those who are trying to improve their credit scores should not open new accounts and instead should focus on repaying the debts on their current credit cards.
    3. Repay credit card debts instead of transferring them to a card with a lower interest rate. Repaying a debt completely will reflect more favorably on your credit score.
    4. Once you have repaid credit card debts, limit the use of these cards in the future and maintain a low balance. Try limiting yourself to using cash for daily expenditures and credit cards for larger purchases.

    5. Finally, time can also help to improve your credit score. Most blemishes on a credit report, even bankruptcies, become less damaging over time and some of these items may even be removed from your credit report after specific time periods. During this time period, the individual should work to establish a solid credit history.

 

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