What can you do when you find yourself on a credit challenged situation? Is there any way to do a quick credit repair? Well, take a deep breath and follow these guidelines to know how to get back up and get a good credit score on the soonest possible time.
What Makes Up Your Credit Score?
Credit scores are being used by lenders to gauge your credit worthiness or your ability to make payments over time. In order to qualify for mortgage or get better interest rates, you need to get your score up. But before you do that, you’ll need to understand how the score is weighed and calculated. So, here are some ideas:
- Your payment history credits to 35% of your score. You cannot change the past, but you can start making diligent and timely payments as soon as possible.
- It is important to maintain a less than 30% of all the available credit that you have on your cards.
- History of the length of time and types of credit that you had matters. This shows your track record or behavior patterns in paying monthly dues over time.
How To Do A Credit Repair
There are methods that you can do to start credit repair within your control. First, you need to attend to any of your unclosed items. Take this opportunity to pay off items on collection in full or until completed, but make sure that the collection agency will commit to giving a deletion letter to the Credit Reporting Agencies when you do so.
Another is to enhance your credit by getting yourself two secured credit cards. Make sure that you would only utilize less than 30% of your credit limit for this to work. Charge around $60 and pay off about $50 on billing period. Do this on both credit cards for a few months. Algorithms used by agencies to calculate credit behaviors are mostly based on ratio and not on amount, thus you can use it on your advantage.
There are plenty more methods that can be used for credit repair, all you need is proper guidance to get back on track. Read up on the Fair Credit Reporting Act and avail of your right to review your credit report once a year. You can dispute any derogatory items on your credit report by writing or online. (You can read more of it here.)
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