Even if you consider yourself financially responsible, there may come a point when you realize that your credit report is in need of repair. Yes, this is frustrating. And yes, it can take time to make up ground. However, there are basic steps you can take that will have a positive impact on your credit score.
Here are five steps to take:
Review Your Credit Report
This is where it all starts. You may know that your credit report is in need of repair, but that doesn’t mean you also know how to fix it.
Once you conduct a comprehensive review of your credit report, you’ll have a clear understanding of what’s wrong. From there, you can confidently formulate a strategy.
Your credit report should be 100 percent accurate, but that’s not always the case. You may come to find that there are one or more errors on your report, some of which are dragging down your score.
If you spot an error, even a minor one, contact the appropriate credit bureau to file a dispute. Letting this linger can continue to cause harm to your credit score.
Look for Ways to Improve
While reviewing your credit report, make note of anything you can do in way of improvements. Can you start paying your bills on time? Can you pay off a debt that is in collections? Can you pay down excessive credit card debt?
Small improvements can have a big impact on your credit score, so you should always be on the lookout for action items.
Pay Down Debt
Not only is this good from a credit perspective, but it’ll improve your overall financial health. If you have debt, make a plan for paying it down. It’s as simple as that.
It doesn’t matter if you only make a little bit of progress each month, it’ll add up over the course of a year.
Stop Applying for Credit
There will be times when you have to apply for credit, such as when you’re purchasing a car. However, you should keep hard credit checks to a minimum. Every time you apply for credit, your score can drop from roughly one to five points.
If you need credit, go ahead and apply. But don’t get into the habit of doing this for no good reason.
Even if your credit report is in good shape — from what you can see — don’t hesitate to closely review it. You may pinpoint a few things you can do to fix your credit and get your finances back on track.