How to Fix a Bad Credit Score: Small Business Trends
When you take credit, your lenders want to ensure you are going to repay the money you have borrowed. Though, if you have a poor credit score already, don’t despair, there are numerous ways to fix the situation.
The exact actions depend on your individual case, but here are a few tips what you can do to repair your credit score today.
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What is a “Bad Credit Score”?
First things first, let’s define what a ‘bad credit score is’. It is a record of your past failures which makes impossible to take a new credit. Lousy credit score makes many things difficult and impossible.
Credit repair is dramatically crucial if you want to start a new business, get new employment opportunities, or want to know that you can borrow money anytime you need (more info here).
One Quick Step for Fixing Your Credit Score
The best and fastest way to fix your credit score which will give you the best results is by paying out your existing accounts, meaning paying your balances and existing credits. This method would be useful if you had a large balance from month to month.
Try to keep your utilization rate lower than 30%. It means if you have $100 and your total credit is $500 then your utilization rate, in this case, is 20%. Plus, pay your credit card payments in advance of your statement period.
Check Your Credit Reports & Scores
If you had your credit application denied, or interest rate was increased recently, take it as a sign that your credit score is falling down.
Find out your FICO credit score. FICO is a data analysis company specializing in credit scoring services. Most national banks use FICO to decide on making loan or credit approval.
Three credit reports are Equifax, Experian, and TransUnion. Whatever how you got your bad credit score, initially you need to make an accurate check of all your reports. It can give you an understanding of what is hurting your credit score.
Remove Errors in Your Reports
It’s essential to check all three reports since information in all of them may vary. Besides, creditors may pick one of three reports to assess risks or take the lowest score in some cases.
Once you have all your three reports, scrutinize them for any old, outdated, or inaccurate information. The credit bureaus don’t verify the info before entering into your reports. Thus the errors may appear. If you find any mistake or outdated info, you need to file a dispute directly to the credit bureaus or hire a company that will make all the ‘dirty job’ for you.
Repair Your Bad Credit
Bad credits won’t last forever. You need to check your reports and fix mistakes and errors with disputes. After it is done, you have only wait. Some of your negative marks would become less important over time. Try your best to add only positive information to your credit score, such as paying your accounts regularly.
Author: Emily Spence
