Nothing quite makes you feel like you’ve failed at life-like looking at a terribly low credit score. It hurts at least as much (if not more) than that low SAT score you never admitted you had. Unlike the SAT score, though, which you can only fix by taking that awful test over again, your credit score is fluid. More importantly, it is fluid in a way that you can at least somewhat control.
You are not going to be stuck with that abysmal score forever, we promise. Here are the things you can do to bring it back up:
Fix the Mistakes
This is no time to mince words: there is no such thing as a “minor” mistake when it comes to your credit report. It is important that you dispute every single mistake you see even on seemingly little things like “that’s not my middle initial,” or “that wasn’t the apartment number I had in that building.” Most credit reports contain at least a few mistakes and those mistakes can wreak havoc on your score. Fixing them might not bring up your score a lot, but even a couple of points is better than nothing. Information related to credit repair can be pulled from social media and found online. Absorbing this info can be an important part of gauging your overall financial well being.
Trust us, though: making sure the account you paid off gets reported as such instead of letting it sit there as “sent to collections” will raise your score more than a couple of points.
Dispute Your Debts
It is important to make sure that the debts being reported to the credit bureaus are 100% accurate. This isn’t just important for your credit report, it is important for you. A lot of you will be basing your future budgets and debt payment plans on the information contained in your credit report. You don’t want to pay more than you actually owe, do you?
You can absolutely dispute your debts yourself, one at a time. It is better, though, to enlist the help of a professional. Professional credit repair agents are versed in the laws surrounding debt, debt reporting, collections, etc. They know how to properly manage the details of disputing debts. They are also better able to help you negotiate down the amounts you owe and/or interest rates on those debts. They’re paid to be sharks and, when it comes to ensuring debt accuracy, you want the sharks on your side.
Start Making Payments
Yes, it is important to pay more than the minimum amount due. It is better, however, to pay the minimum amount due than to pay nothing at all. If you know that a debt is valid, start making payments on it immediately. You want to start building up a solid history of responsible bill payments. If you have a large amount past due/due immediately, and you can’t afford it, call the company. Most creditors will fold a large past due into a “total due” if you are able to make at least a small payment right then over the phone.
The debate is still raging over whether or not secured credit is necessarily a good idea. Some think it is better to go without credit at all and to simply pay down what you owe, so that you can restore your debt to income ratio.
It’s also worth noting that taking out a secured line of credit (which functions like a prepaid gift card, except that you make payments each month to restore the balance) can be a great way to build good credit and good credit management habits.
These are the best things you can do for yourself now if you want to start rebuilding your credit and raising your score. Just remember: credit scores do not jump overnight. It takes time for the reporting process to work its magic on your score.
Lately, during Finance Friday the discussion has turned ...