There is no quick and easy way to repair your credit. Actually, no one can erase, fix, repair, or change information contained in your credit report if that information is accurate. Credit bureaus report negative information for seven years and bankruptcy information for ten. In general, time is the only thing that will “fix” your credit report. Information in your credit report will only be changed if items are actually wrong, or are dated beyond the seven or ten year reporting period, required under federal law. However, there are measures you can take to improve your chances for receiving credit in the future, even if you have been denied credit in the past.
If your credit report reflects late or skipped payments, delinquencies or other negatives, you may be denied credit for important purchases (new home, a car, etc.). Even jobs now are running credit checks for employment eligibility. Freedom Debt Management can show you how to begin to improve your credit while saving you thousands of dollars in interest charges and creditor fees!
Your credit score is determined by the following.
Payment history = 35 %
Amounts owed = 30 %
Length of credit history = 15 %
New credit = 10 %
Types of credit = 10 %
Following the order above, we can break down each entity of the credit score factors to help better assess how to really improve your credit.
- Paying your bills on time accounts for 35 percent of your credit score! Delinquent payments and accounts with collection agencies can place a major negative impact on your credit rating. This step is crucial and requires a lot of attention and discipline on a monthly, consistent basis. Stay current with your payments in accordance with the billing cycle.
- Amounts owed takes 30 percent. Keep your balances low. Balances exceeding 50 percent of your available credit per account can take your score down quickly. Don’t rob Peter to pay Paul either. Moving debt around doesn’t help your credit score.
- The length of your credit history takes third place in priority, accounting for 15 percent of your score. Try not to open too many accounts at once in an effort to build credit. Newly opened accounts can lower your average account age and can greatly affect your score if you don’t have a lot of other credit information.
- New credit takes 10 percent. When you decide to establish new credit, shop your rates and loan options within a controlled period of time, like a week. Completing loan and credit applications over weeks at a time can reflect poorly and drop your score. If you’re shopping for deals, do it within a certain time frame and lock down your options, comparing rates and fees for services.
- Lastly, you need a little credit variety in life… just like a diet and dining. Apply for new credit accounts only as needed. Just to note: Getting the new xbox360 is not a need… says my wife. Opening new accounts and spending on them just to establish new credit doesn’t raise your credit score. Paying timely on your installment loans and combined credit cards can raise your score over time coinciding with the above factors.
Nothing will repair your credit like paying bills on time and debt consolidation makes it easy for you to make those timely payments. Consolidate your unsecured debts like credit cards, student loans, bank lines of credit, medical bills, department store credit cards, collection agency accounts, etc. With a debt consolidation process your existing creditors remain the same but your interest payments are re-negotiated, lowered or completely eliminated to allow more principal to be paid each month. In fact, debtors may cut their monthly interest costs by as much as half! Don’t waste money on high-interest credit card debts!