Repair Your Credit, You Just Might Need It
Please keep in mind that we may receive a commission when you click on our links and make a purchase. This, however, has no bearing on our reviews and comparisons.
Credit is essential in the current times. It’s no secret that having a good score is important. A high score can help you qualify for loans, get lower interest rates, and even land a job. So, it’s no wonder that many people with low scores feel ashamed or embarrassed. The good news is, you can improve your score without anyone knowing. In my book “Life is Short, Buy the House: The Ultimate Guide to Prepare for Homeownership” I explain how credit is used by lenders when considering your application for a home purchase
What is Credit Repair?
Credit Repair is the process of reviewing your reports from all three major bureaus as well as some additional bureaus. You might not be aware of the additional bureaus but I’m 300% sure they are aware of you. In fact, they watch your every move and snitch to anybody who listens. The three major bureaus are Transunion, Equifax, and Experian. There are plenty of other bureaus but two popular options are Lexis Nexis and Innovis. You are entitled to a free annual report from each bureau at AnnualCreditReport.com.
Credit repair involves removing inaccurate information from your report. This could be basic identifying information or related to past accounts. Consistently, reviewing your report is a great way to be notified when there is new activity. This also helps protect you against someone opening accounts without your knowledge. Credit monitoring sends an email when there is an update to your report like a new account. Personally, I use Smart Credit for monitoring and obtaining my score in one place.
There are a number of things that impact your score, including late payments, maxed-out credit cards, collections accounts, and more. Here are some things you can do to boost your score.
Review Your Credit Report for Accuracy
Review your credit report from all three major bureaus—Experian, TransUnion, and Equifax—to make sure there are no errors. Get your free annual report from each bureau at AnnualCreditReport.com. If you see any errors on your report, dispute them with the appropriate bureau.
Make Your Payments On Time
One of the biggest factors in your score is making your payments on time. So if you want to improve your score, pay all of your bills—including your mortgage, car payment, student loans, etc.—on time every time.
Keep Your Credit Card Balances Low
Another factor that’s taken into account when calculating your score is your “utilization ratio.” This ratio is calculated by dividing your total outstanding debt by your total available credit limit. To keep this ratio low—and thus improve your score—keep your balances below 20% of your total available credit limit.
Reduce or Eliminate Debt with Collections Accounts
Collections accounts cause major negative impacts on your score—especially if they’re recent collections accounts. Negotiate any collections on your report with the collection agency to have the account removed in exchange for payment. Get any agreement in writing.
These are just some of the things you can do to improve your credit score.
5 Reasons Why You Should Repair Your Credit
1. Stop paying security deposits
Whether moving into an apartment or new house, utility services use your report to start or transfer service, additionally with cell phone providers, they perform a credit check before allowing service to start. They make a decisions based on that report if you can immediately start service or if a deposit is required.
2. Pay lower insurance premiums
Similar to utility and cell phone providers credit checks are performed to determine your insurance premium rates. Lower credit scores mean higher insurance premiums.
3. Buy a new house
Lenders review scores when considering your application for a home loan. Even in first time home buyer programs that don’t require minimum credit scores, a healthy background is still required.
4. Buy a car without a cosigner
Having a low score can halt your ability to purchase a car without a cosigner. A cosigner takes full responsibility for paying back a loan, along with the you. The co-signer is obligated to pay any missed payments and even the full amount of the loan if you don’t pay. This is a lot to ask of someone and puts added pressure on you because you now have the potential to damage two credit scores with your actions.
There's More...
5. Employment Opportunities
Many employers also check your credit report during the hiring process especially when hiring for positions that include financial management. Employers use reports information looking for signs of high amounts of debt or other financial problems in the past.
6. Help your children build credit (BONUS)
An added bonus of repairing your credit is giving your children a head start on their own financial journey. Making your child an authorized user on a credit card with a good payment and utilization history. Afterwards continue to maintain good will help them start off with a good score.
Involve your children, help them learn about how credit works earlier rather than later.
Any extra tips?? Drop them below!
To get a handle of your finances ; Grab the Free Money Moves Starter Kit HERE