Bad credit hinders millions of Americans from getting personal loans, automobile loans, and home loans. Lenders are not comfortable with lending money to consumers that have a poor history of paying their bills on time. In some cases, a low beacon score can prevent you from being considered for certain employment opportunities.
Unfortunately, some people are under the false impression that they are unable to turn their credit picture around. Nothing could be more further from the truth! If you start taking action today, you can improve your credit score.
Can you imagine how your life will be once you begin receiving premium credit card offers? Would you like to become the perfect candidate for a home loan with a low-interest rate? These things can happen if you take charge of your credit file. It’s now time for us to review six tips on how to fix a bad credit status.
1. Check Your Credit Score
Your first step begins with you checking your credit score. Under The Fair Credit Reporting Act, you can get your free credit report from the three major credit bureaus (Experian, TransUnion, and Equifax). Please keep in mind that your credit reports may have different information.
It’s imperative for you to look at each report carefully. This will help you see if they are correct.
2. Dispute Errors on Your Credit Report
Many credit repair professionals state that errors hold consumers back from having good credit. There’s a possibility that you will see an error on your credit report. You must dispute the error immediately. An error can have a huge negative impact on your credit score.
Simply send a dispute letter to the credit bureau. By law, the credit bureau must remove the error from your credit file. When they do, your beacon score will go up.
3. Challenge Collection Agencies
Do you see the negative entries on your credit report? Collection agencies will not hesitate to put a negative remark on your credit file. Fortunately, the law is on your side when it comes to dealing with collection agencies.
You can challenge collection agencies by sending them a dispute letter. Once they receive your dispute letter, they must prove that you owe the debt. If they cannot, they must remove the negative entry from your credit file.
You can send a dispute letter to the credit bureau if the collection agency does not remove the negative entry. The credit bureau will investigate. If the collection agency cannot validate the debt, the credit bureau will remove the negative remark.
4. Pay Outstanding Debts
Are outstanding debts standing in your way? If so, it’s now time for you to pay them off. You should tap into a reliable source for capital if you a little short on cash.
You should consider checking out title loans no credit check. This is probably your best option at this point. Banks and credit unions are notorious for having their prospective borrowers fill out stacks of paperwork for a loan. They will not hesitate to deny you if you have bad credit. You will not go through this experience when you get a title loan.
5. Get a Secured Credit Card
A secured credit card can help you get on the right track. With a secured credit card, you will send the lender a deposit for a certain amount. It could be $300, $500, or a $1,000. The lender will use your deposit as collateral.
When you use your secured credit card, you will be borrowing against your deposit. This protects the lender from any risk. In return, the lender will report your activity to the Experian, TransUnion, and Equifax. Positive activity will boost your credit score.
It’s vital that you make your payments on time. If you don’t, your credit score will drop.
Piggybacking is one of the easiest ways to repair bad credit. Piggybacking is where you become an authorized user on someone’s account. For example, let’s say you have a close relative with a credit card. You can ask them if you can become an authorized user on their account. As an authorized user on their account, their credit activity will have an impact on your credit score. Their timely payments will be reflected on your credit file.
As a consumer in America, your options are limited if you have poor credit. You must take action if you want to turn this around. The six tips above can help you fix a bad credit status. It could take several months for you to see a change in your credit score, but it will be worth it.