Sponsored Links
In order to take advantage of the lowest interest rates on loans, a consumer needs to have a good credit report record. However, if your credit file is poor, we have listed
some easy steps to fixing bad credit reports.
To begin, simply request a copy of your credit report from the three major credit-reporting agencies so you can reconcile any discrepancies. If there is an error in your
credit file or an outdated item, you can challenge it, for free, under the Fair Credit Reporting Act. Contact the company making the inaccurate report, and then contact the three major credit
reporting agencies.
Next, if the information in your credit report is accurate, you will want to contact any overdue collection agency accounts and make payment arrangements. Having past and overdue accounts count as
negative items and are 35% of your credit score. This is the most important factor because it shows how you have paid your bills in the past, placing the most emphasis on recent activity.
Finally, if you have no open major credit cards, such as a Visa or MasterCard, obtain two unsecured credit cards. If you cannot obtain a unsecured credit cards, apply for a secured one. This can
help to establish good credit over time. If you have open credit cards, you will want to maintain your balances under 50% of your total credit line. Amount of money you owe and the amount of
available credit is 30 percent of the score. This factor is your outstanding debt and how much money you owe on your credit cards, car loans, mortgages, home equity lines, etc.
The longer you've had credit, particularly if it is with the same credit issuers, the more points you will obtain. This factor accounts for 15% of your credit score.
The best credit scores will have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans. Having a mix of credit is 10 percent of the score.
New credit applications is 10 percent of the score. This factors in your interest in new credit such as how many credit applications you are filling out. The do however, compensate for people who are
rate shopping for the best mortgage or car loan rates. The only time this really hurts your score is when you have had recent credit problems, such as late payments or bills sent to collections.
Fixing bad credit can be made easy, but just takes time. If your patient and follow the helpful steps, you will be able to take advantage of more favorable loan terms in the future.