5 Steps To Fix Bad Credit History

A good credit history gives you the opportunity to obtain credit. 

Whether it’s to invest in a business opportunity, expand an existing venture, purchase a new home or remodel your home, good credit is what often gives you the power to execute your plans.

For many young people, getting credit is the way to support themselves through college or post-graduate studies. For entrepreneurs, having a good credit history gives them access to business loans.

Whatever the reason, having good credit history is a must. 

Still, thousands, if not millions of people have fallen into the bad credit abyss where there seems to be no way out. 

Good news is that there are ways to fix bad credit. Here are five simple steps to take to reboot your credit history and prepare you for better financial times ahead.

1. Get A Good Credit Report And Check The Data

Many who suffer from poor or bad credit do not know that human error or glitches in data are part of the reason why they have bad credit in the first place.

The first key step is to review all your credit reports. Sort through all the figures.  Learn the language of financials. Look for possible inconsistencies in the data as well as the dates.  If there are any errors, take note of them and contact the lender or firm concerned to have these corrected as soon as possible.

Surely, reading through all the information can be a challenge, but the review is all worth it.  Double or even triple check the identifying information, your detailed credit history, and listings such as bankruptcy (if any).

Reading the report will also help you sort out what areas need repair or immediate action such as maxed out accounts, late accounts, or those that are already with the collection agencies. Needless to say, you need to check the report for any items that need to be paid, but had actually been settled for already.  There have been cases where items are billed to you for accounts that are not yours.

Identifying errors will help you effectively deal with credit bureaus during a dispute procedure. Correct data leads to accurate and good credit reports, not to mention saving your money from false billing.

2. Focus On Payment History

According to experts, your payment history accounts for 35% of your credit score. Don’t let past due accounts sink your score and write bad history. If you cannot fully settle past due accounts, at least have them classified as “current”.  Remember, in most cases, accounts that are classified as delinquent can still be saved and re-classified as current as long as you have not gone past the 180-day past due mark.

3. Lower Limits In High Account Balances

Another important step to take is to lower the limits on high account balances.  Credit experts say that your “credit utilization” is 30% of your score. In simple terms, if you have a high balance and have multiple maxed out accounts, the lower your score.  Make sure you are always below the credit limit so that you can gradually improve your score while working on ways to settle the accounts.

4.  New Credit

Surprising as it may seem to those new in handling credit, getting new credit is a good way forward to getting better history.  As soon as you resolve problematic accounts, getting new credit where you can rebuild a positive history will have good effects for you in the long run. This simply means you are creating a new credit history that shows you are up-to-date on payments, which leads to improved scores.

5.  Learn More Credit Repair Strategies

After taking the suggested steps, it is always an advantage to learn more strategies to repair your checkered credit history.  For example, for legal reasons and to address negative cash flow issues, many immediately file for bankruptcy.  This seriously hurts the credit history.  Some close accounts that still have balances, and this also hurts your history. Multiple inquiries on credit, which are reported to the bureaus, also hurt your credit history.  So in short, learn about ways you hurt your score and learn more strategies how to prevent these negatives from happening in the first place.

Knowing the strategies and using tools for better handling your credit will take you out of the financial quagmire. By being a more responsible user of credit, you have the power to rewrite your history for good.


Author Bio: The Frugal Mom is a single mom who loves to shop and is fond of looking for cheap but quality finds. Despite her busy schedule being a mom and a career woman, she always try her best to do 5km run everyday to stay fit.