A bad credit score or a tainted credit report can make it difficult to obtain loans, get an apartment and rent a car. It can also increase the cost of many other things, including auto insurance and life insurance. Fortunately, there are several ways to fix bad credit quickly and effectively. The key is to make on-time payments, work to improve your debt-to-credit ratio and nurture your lines of credit over time.
The average bad credit fixing score in the United States is 710. A good credit score makes it easier to qualify for financing, rent an apartment and purchase a home, and may result in lower mortgage rates. It also opens up funding options that aren’t available to those with bad credit, such as business loans for poor credit.
There are many reasons why a person’s credit could fall into the bad category, from medical bills to unpaid utility bills. If you’re not careful, your credit can be destroyed in a matter of months. Fortunately, there are steps to repair bad credit, from disputing errors on your credit report to improving your payment history.
Credit Repair Companies
There is no quick fix to fixing bad credit. Even if you pay down debt and keep your accounts open, it takes at least a month for that activity to be reported to the credit bureaus and reflect in your credit score. It can take years to recover from serious damage and get a high credit score again, but the effort is well worth it in the long run.
If you’re struggling to maintain a high credit score, you may be tempted by credit repair companies that promise to clean up your report for a fee. However, the truth is that you can do it for free on your own by requesting a copy of your credit report from each of the three major reporting agencies. Inspect each report carefully for any errors that you can dispute, such as a closed account that’s listed as open or an outdated credit utilization percentage.
Avoid New Credit
Applying for a loan, credit card or other financial products can trigger a hard inquiry on your report, which can trim points from your credit score. To prevent this from happening, avoid applying for new credit in the future until your credit is in better shape. You can use a secured credit card to establish a new line of credit, but be sure to make regular payments on that account and avoid carrying a balance on the card. Using a personal loan to build credit is another option, but this should only be considered if you can afford the monthly payments and don’t have any other debt obligations to pay down. If you do plan to apply for new credit, be sure to space out the applications over a period of months, so your credit scores don’t flag each request as suspicious. This way, you’ll be able to show that each request is legitimate and the credit bureaus won’t consider it frivolous.