How to Fix your Credit – Improving your Financial Reputation

If your recent loan application was unsuccessful thanks to a poor credit score then you need to figure out how to fix your credit.

Your three digit FICO rating can greatly determine whether your application for a mortgage or an auto loan will be approved as well as the interest rate that will be chareged for your loan.

However, the significance of your credit score goes beyond simply securing loans.

Potential employers, landlords, insurers and credit card comapnies will all have to check out your credit file before deciding whether to approve or decline your application.

That’s why the growing importance of your FICO rating makes repairing a bad credit a crucial necessity.

Read Also: Creditworthiness – Why is it Important to You?

So how do you fix your FICO?

There are various ways through which you can repair a damaged credit score. Here are some of the approaches that you can consider.

Applying for secured credit cards

This is a very effective way of improving your credit rating. In order to apply for a secured credit card, you need to have sufficient funds deposited with the bank that will pay the charges incurred on your card.

The fixed deposit savings in your bank acts as collateral when applying for this type of credit card.

While this fixed deposit cannot improve your credit score overnight, it reports on your behalf that you are making timely payments thus improving your credit score with time.

Applying for small loans with a co-signer

If your credit score is bad, then chances of your loan application being approved can be slim. As such, you might want to apply, and repay, small loans in order to convince your lenders that you can be trusted with credit.

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If you can pay off small loans, then potential lenders will be convinced that you can pay off larger loans like home mortgages or credit for auto financing.

Unfortunately, because of your bad credit standing, you may encounter difficulties when trying to secure even small loans. This is where co signers come in to play.

You can talk to your friends or family members whose credit scores are better in order to be a co-singer with you when applying for a small loan.

Checking and correcting your credit report

Checking and correcting your credit report at least once every year is also important while fixing your credit rating.

Your bad credit can be the result of errors on your report that are not your fault. These errors can lead to a poor credit rating and are easily fixed.

Some of the common errors or omissions in your report can include an increase in your income or a failure to include some loan repayment detail.

Once you have received your credit report from the credit bureaus, you need to scan through it for flaws that might damage your score.

You need to know that under the FCRA, it is within your right to demand that any erroneous items appearing in your report be investigated and corrected by both the credit bureaus and your creditors.

How do you Dispute Credit Report Errors?

As already mentioned, credit bureaus as well as your creditors are obliged by law to investigate and correct all errors that are appearing in your report.

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Thus, once you have identified these errors, you need to contact the bureaus as soon as possible, highlighting the errors and demanding their investigation and correction.

Here is a Step-by-Step Process of Disputing Report Errors

#1 Gather all the relevant information

You need to provide the credit bureaus with evidence that there are errors in your report. Thus, you need to provide all the relevant information that will back up your claim.

This begins with you making a copy of your credit report and highlighting all the items in dispute.

#2 Contact the credit bureaus that issued your report

Using registered mail, contact all the credit bureaus that issued the erroneous report.

In addition, provide copies of your evidence to back up your claims. Do not send original documents with your mail. Ensure that you send separate letters to every credit bureau that issue your report.

#3 Contact your creditors

While the credit bureaus are working on your claims, you need to contact your creditors and any other entity that provided inaccurate information to the credit bureau.

In your letter to these entities, request for copies of their transactions with you. The process of investigating and correcting errors in your report should take no more than 30 days.

Once this is done, you will be issued with a new report, hopefully with a better credit rating.

Fixing your credit does not have to be a daunting task, neither should it cost you a lot of money.

Always remember, just like most diseases, credit repair may take some time. However, if you are trying to figure out how to fix your credit, then you need to know that with patience and diligence, all things are possible.