How to Repair Bad Credit in the initial Stages

So you’re facing money problems and want to know how to repair bad credit so you can get rid of all the stress. Or, perhaps your credit is still okay, but you want it to be better because you know in the future you’ll run into bigger problems. Millions of other Americans are in the same situation. Their credit problems are bad enough that to get credit cards and loans, they have to deal with unreasonable terms and high interest rates.

The good news is that learning how to repair bad credit is easily done with some hard work, and planning. To get a better credit score, the first step is to know where your credit stands. To do this you can get credit reports for free, once a year. However, to see what your FICO scores are, you usually have to pay for them. Keep in mind that some of the credit scores you get from free websites aren’t always used by lenders. Finding out what your scores are now, helps you when you go to repair bad credit.

If your scores are below 760 it is a good idea to learn how to repair bad credit.

How to Repair bad Credit – The Initial Steps

Review Your Credit Reports: Once you receive your credit report look it over to make sure it’s correct. You already have to pay for the mistakes you’ve made, so you don’t want to be penalized more for someone else’s. Check to see that the reports accurately show your payment history and debts. If you don’t, you may be penalized with a lower credit score.

If there are discrepancies, contact your creditors and let them know about the errors. When you do this, always be polite and provide explanations. Also get it in writing, and provide them with documentation. Then make sure you follow-up to make sure the changes are made. It will make repairing your bad credit more difficult, if you don’t make sure your reports are accurate.

Pay Your Bills on Time: Set up a budget with reminders to yourself to pay your bills on time, either on your computer, or smart phone. Your payment history makes up 35% of your score so it’s important to consistently pay your bills on time. You can also have bill payments come out automatically from your bank account on specific days. Setting up simple systems is the second step in learning how to repair bad credit.

How to Repair Bad Credit

Use Your Credit Cards Sparingly: Learn how to repair bad credit, by teaching yourself to live within your means. To get your credit card debt lower, start buying things with cash. When you use a credit card to pay off another type of credit, you’re not helping your credit score, you’re only moving your debt around.

Learn how to Repair Bad Credit by Getting Money by Other Ways

Rather than getting a loan (more credit) to pay off your other credit, try to get a private loan from a friend or family member. Get it in writing so it’s a legally binding contract, and offer to pay interest. Use this money to get down your credit card debt. The third step.

Repair bad Credit by Monitoring Your Credit Utilization Ratio

The term credit utilization ratio is used to decide your credit score, and refers to a percentage of how much the outstanding balances are on all of your credit cards, divided by the amount of each credit card’s limit. For example, if you have one credit card with a limit of $4,000 and your balance is $2,000 then your credit utilization rate is 50%. When you want to learn how to repair bad credit, you need to keep your credit utilization at a maximum of 20%. If you have two credit cards and one has a small balance and large limit and the second card has a large balance and small limit, shift the debt from the second card to the first one. This way you can lower your credit utilization ratio on the credit card with the smaller limit.

If you want to learn how to repair bad credit, use these simple steps and you will be well on your way to seeing an improvement.