Your credit score is one of the most important factors controlling what kinds of credit lines you can get, what type of mortgage rates you will receive and even they interest rates on your credit cards and auto loans. It is for these reasons that having a high credit score is vitally important and being able to fix your credit report and increase your score one of the best things you can do for your financial well-being.
One of the best and fastest ways to increase your credit score is to make sure you keep all of your credit accounts open even if they are a mess and follow the steps below to get each debt taken care of one by one. You’ll need to get a copy of your credit report from each of the Big 3 credit reporting agencies (Experian, TransUnion and Equifax) to get started. Oh, and contrary to what you might hear on TV and the radio, you don’t need a credit repair company to do any of the things we’re going to show you.
It’s best to order a credit report / credit score ‘combo’ when you’re ready to start. Yes it will cost a little (really not much) but it’s easier and will allow you to track increases in your score as you complete the steps.
Once you have the reports / scores you will need to send a certified letter to each agency asking them to delete and debt that is past the statute of limitations. This is normally 7 years for most debts and 10 for bankruptcy. If you spot any mistakes or false information like fraudulent accounts you will need to file a dispute about them to each of the Big 3 and send them any documentation that they require. Also, if you find fraudulent accounts you will need to file a formal investigation for each with each agency.
While this is happening contact every existing creditor that you have (auto loans, credit cards, mortgage lender) and ask them to give you a lower interest rate. This will obviously allow you to pay more of the loan and less in interest. If you’re polite and persistent you’ll be amazed at what they will do for you.
If you can you should transfer money from a high interest credit card to one with a lower interest rate, making sure to check the cost of transferring before you do to see if it’s worth the change.
Finally make payments above the minimum whenever you can and make more payments than the 1 per month that you usually do. Also don’t add any new debt at all until the process is completed.
If you diligently do all of these things your credit score should continue to rise until all of your debts are paid and you’re back on your financial feet.