How to Fix Credit Rating – Simple Ways to Fix Your Bad Credit Rating

Posted On February 8, 2023

Your credit rating is a key factor in getting loans, opening credit cards, and securing housing. A bad credit rating can also cost you thousands of dollars in interest.

Whether your score is low because of a few mistakes or an entire bankruptcy, there are things you can do to improve it quickly. In most cases, it takes about 3-6 months of good credit behavior to see a noticeable improvement.

Pay Your Bills on Time

One of the easiest ways to improve your credit rating is to pay your bills on time. Payment history makes up 35% of your credit score, and late payments can wreak havoc on your scores.

You can set up automatic payments for your most important accounts and use alerts to remind you when your payments are due. Using these tools can help you stay on track and make sure that you never miss a payment.

If you can’t make payments on time, try to work out a repayment plan with your creditors. This could include lowering the amount you owe or negotiating for a lower interest rate, but you must be realistic about the number of payments that you can make.

Also, don’t rack up high balances on your credit cards or loans. Ideally, your credit utilization rate should be below 30% to show lenders that you’re only using a small percentage of your available credit.

Pay Down Your Credit Card Balances

Paying down your credit card balances is a great way to improve your credit rating. This is because it reduces your debt-to-credit ratio and your credit utilization ratio.

The best way to do this is to list your credit cards from the highest balance down to the lowest balance and make minimum payments on all of them. Once each one is paid off, apply an additional payment to the card with the next lowest balance and so on.

In order to fix your credit, you should also take the time to review your credit reports and dispute any errors. This can help you fix your score quickly and will also save you a lot of money in interest payments over the long run.

Review Your Credit Reports

Your credit reports are a valuable resource for lenders and creditors, who use them to evaluate your financial history and creditworthiness. They can also help you understand your credit standing before you apply for a new loan or credit card.

The three major credit bureaus — Experian, Equifax and TransUnion — all provide you with free access to your credit reports once a year. They also offer free credit monitoring services that do not affect your credit score.

While you review your credit reports, be sure to pay attention to any unexpected changes that might indicate errors or fraud. Examples include a name being added to your account that you don’t recognize or a new account showing up when you didn’t open it.

If you spot any errors, take action to dispute them directly with the reporting bureaus by phone or online. The credit bureaus will investigate the matter and, if they find that information is wrong, it should be removed from your report.

Contact Your Creditors

Your credit rating is critical to your ability to obtain loans, insurance, credit cards or a job. Errors on your credit report can negatively impact these decisions, so it’s important to dispute any inaccurate information immediately.

If you find errors, dispute them right away by sending a letter to the credit bureau or organization that furnished the information to the credit bureau. The letter should contain your complete name, address, each piece of inaccurate information that you’re disputing and copies (not originals) of any documents you have to support your dispute. If you’re unsuccessful in settling the dispute, file it with the Consumer Financial Protection Bureau (CFPB). The CFPB oversees many types of financial agencies and can take action against them for violating their law or unfairly using your personal information.