Whether you have experienced a spell of bad financial management, been unlucky due to the effects of the recession or simply have yet to build up a credit history, if you have a less than perfect credit score you could be storing up problems for yourself.
Using credit is part and parcel of modern life for most Americans, and if you need to take out a loan for a house, car or piece of business equipment you will find it harder, and pay more for the privilege, than those with a healthy credit score. What’s more, even insurance premiums and employment prospects can be harmed by a poor credit report.
Which Factors Affect your Credit Score?
There are numerous factors which work together to determine your credit score, but the following three top the list:
- Payment history. The largest influence on your credit score is your ability – or otherwise – to pay your creditors in full and on time – every time.
- Credit usage. If you tend to run your affairs so that you are just under your credit limits you will be seen as a more risky prospect than someone who has more room to manoeuvre.
- Credit history. Getting a good credit score requires proving that you can handle credit. This is difficult if you are young, or have always avoided credit.
There is no ‘one size fits all’ credit repair process, but following the steps below should help most people to turn things around.
A 5 Step Credit Repair Process
Step 1: Tackle any errors.
Each of the three credit reporting agencies (Experian, TransUnion and Equifax) is required to grant you a free copy of your credit report every 12 months. Start your credit repair process by requesting your three files and then checking them for errors or inaccuracies; 70 per cent of credit reports contain them, so this is definitely a worthwhile step.
Step 2: Consider a credit repair agency.
Dealing with debt can be upsetting and overwhelming as well as time-consuming. A legitimate credit repair agency can take that weight off your shoulders and help you to deal with the credit report agencies and your creditors effectively.
Some agencies employ illegal tactics, so it is important to choose wisely. Speed Fund LLC can help you to improve your credit score through Better Qualified, an agency rated A+ by the Better Business Bureau.
Step 3: Get up to date on your payments.
Since payment history is the most important element of your credit score, it makes sense that getting up to date with payments should be near the top of the list of any credit repair process. Some credit repair agencies have long-term relationships with creditors and can often secure generous repayment terms for their customers. Once current payments are in hand, future payments should be organised to minimise the chance of things getting out of hand again. Setting up automatic payments from a checking account is usually the best route to go down.
Step 4: Pay down your existing lines of credit.
Once regular payments are taken care of, start the process of bringing down your credit balances. Some people prefer to tackle multiple smaller balances first, while others prefer to chip away at the bigger debts. Either way, don’t close accounts unnecessarily because they form an important traceable part of your credit history.
Step 5: If necessary, open up new lines of credit.
This final step is probably best done only after consultation with a credit expert, like an account representative at Better Qualified, Speed Fund LLC’s chosen credit repair process agents. It is for those who anticipate needing credit (e.g. to finance a house or car), but who have a poor credit history simply because they have never used credit before. By taking out specialist credit cards (often secured, high interest cards) and using them sensibly, people can improve their credit score sufficiently to qualify themselves for the best interest rates when they do need to access credit.