Step By Step Instructions to Repair and Protect Your Credit

How to repair credit

The following guide will give you the tools to dispute inaccuracies, clean up outstanding derogatory credit, and then prepare you to rebuild your credit. Within a reasonable amount of time, you should be able to improve your credit situation to qualify for credit cards, installment loans, and even a mortgage.

Whether you have recently filed for bankruptcy, had a past foreclosure, car repossession, or divorce, the following suggestions will help you repair and improve your credit. The following guide will help you obtain free credit report directly from the three main credit agencies in the United States, and give you the tools to dispute inaccuracies, clean up outstanding derogatory credit, and then prepare you to rebuild your credit. Within a reasonable amount of time, you should be able to improve your credit situation to qualify for credit cards, installment loans, and even a mortgage. Credit impacts almost every aspect of our lives, lenders use credit scores to determine a borrower’s ability to qualify for credit, whereas many employers now require a credit check to verify if past credit issues such as: bankruptcies, foreclosures, or judgments may disqualify you for a new job.

The following suggestions will help you improve your credit:

• Request a Free Copy of Your Credit Report - The 3 main credit agencies are (Transunion, Experian, and Equifax). Your combined report can be requested online through annualcreditreport.com. You are legally entitled to one free credit report annually.

• Review Your Credit Report - You can request the credit bureau(s) correct any errors or dispute any derogatory or inaccurate accounts. If the creditor who put the derogatory credit on your credit report cannot provide evidence that you owe the debt, it should be removed from your report.

• Bring All Accounts Current - If you have past due accounts, you should focus on bringing them current first. Usually you can bring delinquent student loans current by negotiating a payment arrangement with the creditor. Then after 6 months of on time payments the creditor will likely report the account as current. If the creditor allows, set up the payment to be automatically deducted from your bank account. That help will ensure your future payments are paid on time.

• Rebuilding Your Credit – If you have little to no active credit, apply for a secure credit card. They are offered by large banks online, local banks, and /or credit unions. A secure credit card usually requires a minimum $300 deposit to open an account. This type of credit card will report payment activity to the credit bureaus just like a standard credit card. A secure credit card is a great way to obtain new credit. The last thing you want to do is apply at numerous lending institutions and pile up inquiries (which will lower your credit scores). You may need a co-signer if your credit scores are below 500.

• Keep Your Credit Card Balances Low – Remember, if you keep your credit card balances below 30% of the credit cards available limit, you will help maximize your credit scores. When rebuilding your credit, time will be your best friend. After 6 months of on time payments with a secure card, ask the lender to upgrade your credit card to a standard card. Also ask for the limit to be increased. This will give you more room to keep your balance under 30% of the available limit.

• Limit Your Inquiries – Do your research before applying for a credit card, if you do not meet the requirements go to another lending institution. The last thing you want to do is lose points on your credit scores from excessive inquiries.

• Avoid Closing Credit Cards - The credit bureau does not differentiate between a card closed by the consumer or the creditor. Closing accounts can affect your score by lessening the amount of long-term established credit.

• Alternatives to Re-establishing Your Credit - If you are unable to open a secure card, look into becoming an authorized user with a relative. They may qualify for the loan or credit card and add your name as an authorized user. You can use the card, make the payments, and have the payments recorded on your credit report.

• Protect Your Identity and Credit – If you think there may be fraudulent activity on your credit report. Contact the credit bureaus to put a freeze on your accounts. This will prevent new accounts from being opened unless you contact the bureaus first. Identity theft protection services can also be purchased which will monitor your credit activity and alert you of any potential fraud.

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