Do you know how to fix bad credit? If no!, them this article is for you. A lot of cardholders out there already have very bad credit and do not know how to fix it. In this article, we will consider what you can do to regain that trust that creditors reposed on you when they gave you their card. If you do not fix your credit, creditors may even stop lending you money. Review the followings :
How To Fix Bad Credit : What Is Bad Credit?
Bad credit means that in the past, you failed to pay your balances in full monthly. It also means that you may not have paid on time or you were spending above your credit limit. It also indicates records like state or federal tax liens, bankruptcies, or legal judgments against you.
How To Fix Bad Credit : FICO Score
FICO means Fair Isaac Corporation. (FICO) developed the software and algorithms to calculate, that’s why it has his name. Credit bureau calculate a score based on your credit information. However, credit card issuers view and assess borrowers differently according to their needs, so to accommodate this, dozens of FICO score variations and calculations exist. Credit scores range from 300 to 850, with 650-670 being considered the low end of a “good” credit score and lower scores showing very bad credit.
It is negative reports on your account that gives you a bad credit. It could be your inability to pay your debt or late payment. Your account going to debt collectors, foreclosures, overspending, having high balances and many more shortcomings.
Bad Credit Card Effect
When lenders discover you have bad credit, it means that you are not creditworthy. They simply do not want to take an unnecessary risk. What do they do? They decide not to approve your credit card application. In some cases, they just give you a high interest credit card that you have to pay through your nose.
Moreover, apart from having a negative effect on your loan and card application, bad credit do a lot more. Some insurance companies check your credit score when giving you an insurance rate. Many landlords demand for a higher security deposit from people with low credit. Even some cell phone and utility providers demand a security deposit from individuals with bad credit
Check Your FICO Scores
Always review your credit score to know your stand. Yes! Checking will make you know when you are overspending, when you have high balances and any other delinquency. Once you know your problem, you find it easier to fix it.
In case the creditor does not approve your card application or increases the interest rate for your card, then you have a problem. Also, if they lower your credit limit, know that your credit low.
Go ahead and get a free copy of your credit report each year from each of the three credit bureaus, TransUnion, Equifax, and Experian. Carefully examine the content to know where to work on. If there is an error in the report, dispute it immediately. It could even the cause of your bad credit.
Check your credit report from AnnualCreditReport.com. You can also get free estimates of your score by signing up for one of the many credit monitoring websites.
Repair Your Bad Credit
To repair your bad credit, do the followings:
- Pay off your balances in full.
- Avoid late payments.
- Stop overspending.
- Pay your annual and other fees.
- Remove negative information from your report by disputing them.
- Meet a credit repair firm to give you professional help.
- Avoid any kind of delinquency on your account.