How To Fix A Bad Credit Score ASAP 2022
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How to Fix a BAD Credit Score ASAP
If you’re just getting started with building up your credit score, there are tons of strategies you can undertake to ensure an iconic 800+ score. But what if it’s a bit too late and you’ve already messed yours up? It’s not really that big of a deal, so don’t beat yourself up over it. Everyone makes mistakes, but what matters is how you rectify and learn from them.
So, this video is particularly for those of you who are struggling with your financial life because you have a credit score below 680 or so. Even if it doesn’t seem like a huge deal right now, it will cost you a lot of money in the long run. Wherever you go, you’ll be charged with higher interest rates. Whether you apply for a credit card, an auto loan, a mortgage, etc. – you’ll certainly struggle with a bad score on your report. In fact, they might not even give you the loan in the first place! One thing to keep in mind, however, is that none of this will happen overnight. You have to be patient and strategic, and over time, your financial situation will certainly improve.
The very first thing you do before attempting anything else is figure out what’s making your score drop, to begin with. To pinpoint the root cause of the problem, run a credit report using one of the numerous freely available sites. I’d recommend Credit Karma or Mint.com. My guess is it’s one of the following reasons:
1) Not enough credit
2) Late payments
3) Accounts in Collections
4) Maxed out credit utilization
5) Foreclosures or bankruptcies
These stay on your report for up to seven years! Taking a loan is not a bad thing at all – the problem starts when you don’t have the means to pay it off. Lenders typically report late payments to credit reporting agencies once they’re more than 30 days late. So, let’s say you forgot to make a payment on the first of March when it was due, but your intentions weren’t bad. You had the money, but it simply slipped off your mind. That’s alright because you have a whole month to realize and correct your error. The late payment won’t reflect on your report immediately, so even if an amount ends up being a little late, just try not to exceed the deadline. On-time payment history makes up 35% of your credit score – which is a lot!
Another tip is to look for any possible errors or inaccuracies in the report. This one probably won’t work every time, and definitely do NOT lie about it, but if you do happen to find any factually incorrect detail, it’s worth filing a report and getting it fixed.
Accounts in Collection
I’ve already told you what happens when a late payment exceeds 150 days. Lenders usually write it off as a total loss – they assume they’ll never get the money back, and it reflects very poorly on your credit report. Again, in this scenario, I’d recommend you look for any possible errors and dispute them because the collections that show up on your report not only look awful but also stay there for seven years.
Deal with maxed out accounts on your report
If you’ve hit the maximum limit on your credit utilization, it could be contributing to lowering down your credit score significantly. Remember: credit utilization makes up 30% of your score, and the lower it is, the more trustworthy and responsible you’re seen by lenders. If you’ve ended up maxing out your credit, there’s an easy fix for that problem and one that can immediately impact your credit score positively.
The first solution is to obviously only use a small percentage of your overall limit. As a rule of thumb, try to use under 10% of your maximum limit and pay down your credit card, so you owe as little as possible. If you don’t have the money to pay it off, open up more credit. The thing is, credit bureaus don’t care about how many dollars you’re borrowing as credit. Let’s say your overall limit is $1000 dollars, and you spend over $1000 of credit using that card. That means your credit utilization is 100% – not a good thing. Alternatively, if your overall limit is $10,000, and you spend the same $1000 now, your utilization will be 10%!
Bankruptcy and Foreclosure
This one might just be the most challenging to deal with, not only because there are very few ways to work around it but also because it stays on your report for seven to ten years.
You can try and look for errors, which are highly possible. If your lender is not in business anymore, try and dispute and get the bankruptcy and foreclosure removed from your report. In all honesty, if the claims are true, there is very little you can do to prevent it from reflecting on your statement.
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how to fix negative marks on credit report