How to Fix Bad Credit: 8 Effective Tips to Use Now

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Ironically, we don't give credit enough credit sometimes. Having good credit can help you get loans, open credit cards, apply for mortgages, and even help you land a job.

Bad credit, on the other hand, can severely limit your options when it comes to loans, credit cards, rental applications, and more. It can even increase interest rates you pay on those things as well.

But if you made some credit mistakes in your past, how can you fix the credit of your future? Luckily, there are some simple and easy ways that you can use to improve your credit score.

Keep reading to learn how to fix bad credit.

1. Pay Bills On Time

The biggest, and potentially easiest, thing to do is to pay your bills on time. This could be for credit cards, rent, loan payments, etc.

Paying even a few days late can have a huge impact on your credit score, especially if it's already low. Not only that, but paying on time will show that you're responsible and trustworthy with payments, which can increase your credit score over time.

It can be hard to remember when certain bills need to be paid, especially if you're juggling many different cards, loans, etc. Set reminders in your phone or set up automatic payments to make sure everything is paid on time.

2. Pay Off Anything in Collection or Late Payments

If you've let certain payments fall into collections, or you're simply late on payments, your first order of business should be to get caught up with all of these payments.

Call the creditor and arrange a way to pay what you owe them. Same goes for payments in a collection as well. This is the single best way you can fix a bad credit score, since payment history is one of the main factors that go into calculating your score.

While this won't entirely erase bad payment history from your report, it will help fix a bad score in the long run.

3. Establish a Responsible Credit History

Once you're caught up with your payments, it's time to re-establish that you can be a responsible credit holder. How can you do this?

By taking out lines of credit and making the proper, timely payments. This could be done by opening a credit card or taking out a loan. It can sometimes be hard to get loans if you have bad credit, though, so check out The Credit Review website to learn where you can find loans even with bad credit.

Showing that you're ready and able to make payments on time will show creditors that you're trustworthy, and it will raise your credit score.

4. Stay Below Your Credit Limit

Just because you can charge a certain amount of money to your credit cards doesn't mean you should always reach that limit. In fact, regularly reaching or exceeding your credit limit can hurt your credit score.

You should keep your credit card balances at a maximum of 30% of your credit limit. One way to keep your balance low is to make multiple smaller payments throughout the month.

Another way to keep your credit balance low is to pay balances on the cards you use more often first. For example, if you have one card that has a 400 dollar limit and you have a 300 dollar balance and another card with a 300 dollar limit with a 50 dollar balance, you're better off paying the 300 dollar balance first, since this is closer to the limit on that card.

5. Don't Rely Too Heavily on Credit Cards

It's tempting to start charging everything on credit when you get a new card. However, this can quickly lead to you spending more than you have to spend, which leads to late payments and, you guessed it, bad credit.

Only charge what you can afford to pay off. Set a budget that includes credit use and stick to it.

Also, avoid moving your debt around to different credit cards. You're better off working to pay the debt off of a card than you are simply moving it from one card to another.

6. Limit the Number of Credit Applications You Fill Out

Filling out too many credit card applications can actually make your score worse. You could be trying to open a new credit card in order to help your score and inadvertently harm it.

Opening too many cards will also increase the chance that you charge too much and end up with too many payments. This will likely lead to you missing payments and not being able to keep up with them all.

7. Make Sure Your Credit Report Is Accurate

Credit reports aren't perfect. Sometimes there are glaring mistakes that can impact your score.

If you find out that you have a low credit score and it seems a bit too low or doesn't make sense, be sure to look over your full report. Look for any inaccuracies or areas that don't add up with reality.

Getting these errors fixed can bring up a bad credit score.

8. Don't Erase Old Debts from Your Credit Report!

That being said, you shouldn't erase old debts from your credit report. While your instinct might be to get rid of old debts from long ago, but this won't help your score. It will hurt it.

Showing "good" debts on your report (aka debts and lines of credit that you successfully paid off) actually help your score. Nixing those from your report can lower a credit score.

How to Fix Bad Credit: Final Thoughts

Fixing a bad credit score isn't something that's going to happen quickly. It can take years to build up a credit score, so be patient. But following these tips on how to fix bad credit is a great start that will show you positive results relatively quickly.

If you want more tips on finance and money management to avoid getting into more debt or lower your credit score even more, check out our blog.

 

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