If you’re reading this then you already know that your bad credit score is hurting you. You are not alone. According to credit.com, almost one-third of Americans have bad credit—a score below 600. A much smaller number have terrible credit, but we’re not talking about that. Now, the question is how to repair bad credit fast so you can move on with your financial goals.
Your credit score impacts just about everything you do in life. Budgeting and controlling your expenses are the keys to financial freedom. But a medical emergency can come along and derail your plans. Or your car breaks down. You have a better job opportunity in a different state and you need to move. Moving is expensive. Or, even something much more fun…you’re getting married. Most of your vendors want to be paid in advance. At times like these, you need a loan. But, if you have bad credit you will have a difficult time being approved. Peer-to-peer lenders are more favorable toward borrowers with bad credit. But, your goal is to repair your bad credit fast so you can access the most favorable financing possible.
How to Repair Bad Credit Fast
Okay, first of all, what is fast? Nothing is instantaneous. Whatever you do is going to take a little time before you see the results. On average, you should expect to wait 30-60 days before looking for changes in your report. The sooner you get started, the sooner you will repair your bad credit. You will find online offerings to repair bad credit fast. But, everything they would do you can do yourself. Why pay for work you can easily do? Here is a simple strategic plan to help you repair your bad credit fast.
Check Your Report
Many consumers have a low FICO score because there are errors on their credit report. There could be accounts that do not belong to you or that were closed (fully paid). You could be a victim of identity theft and not even know it. You are entitled to a free report, from each of the three reporting agencies. The three credit reporting agencies are TransUnion, Equifax and Experian. You can go to AnnualCreditReport.com to get your report. Once you have your credit report, go over it carefully. If you find errors, get on the phone right away with your creditors and dispute them. If you find accounts that do not belong to you, it could be that your personal identification data has been stolen. Go online and contact IdentityTheft.gov to begin the process of recovery. Do not be satisfied until the job is done.
Reach out to Your Creditors
If your credit is bad because you are behind on payments, don’t hide out. Get in contact with your creditors. Explain your situation and work out a negotiated repayment plan. If you can’t pay at all because you have been unemployed and don’t have any job prospects on the immediate horizon, ask your creditor to forgive the debt or at least a portion of it. You can work out an arrangement where you agree to begin making payments as soon as you are employed and the creditor agrees to change the status of the debt on your credit report. There are a few creative things you can do, but the bottom line is that you need to be aggressive and advocate for yourself.
How is Your Credit Utilization?
How you utilize your credit cards weighs significantly in establishing your credit score. The credit utilization score is based on the total amount of debt on the card compared to the credit limit. Most experts suggest that you keep this percentage between 10 and 30%. Therefore one way to repair bad credit fast is to improve your credit utilization percentage. Do everything to bring your balances down.
Establish a Credit History
If your bad credit score is because you don’t have a credit history, then begin one immediately. Take out one or two credit cards. Keep the limits low, utilize them and pay the bills in full each month.
Don’t panic and close your credit cards. It might seem like the way to improve your credit score fast is to close those paid off credit cards, but the opposite occurs.
Pay Your Bills on Time
Congratulations. You have improved your credit score. Now, you need to keep it that way. The easiest way to do this is to pay your bills on time. Use your credit cards sparingly and pay the full amount due each month. Prioritize debt reduction, budget and save for your financial goals.