How To Repair Credit In A Year

2019/02/25

You can repair your credit in a year. The only thing to do is to pay your bills on time, every time. Do pay your bills on time for a few months. You will see improvement in credit score if you pay all your bills on time.

There are also a few simp le things to do after establishing your repayment history. Read on to find out more.

What Does Your Credit Report Do?

Your credit report has details of your financial history. It helps the creditors (not you). Your credit score tells the creditors if they can trust you with their money. if you have low credit score, the lenders will be hesitant lending to you. They will also charge you higher interest. If you have high credit score, the lenders will be happy lending to you. They will charge you low interest only. They know you are a good bet. From your credit report, they deduce you will repay your loan as promised.

In other words, a high credit score is the key to low interest loans. With high credit ratings, you will also qualify for low interest credit cards. Utility companies like internet service providers and mobile service providers will also require only very low security deposit from you.

In short, your credit report is the tool that creditors use to gauge your credit worthiness. After checking your credit history, the creditors (mortgage lenders, credit card companies, etc) will decide whether to extend a loan to you. They will also decide what interest to charge.

How Do You Build A Positive Credit History?

You build a credit history by paying your bills. If you pay your bills on time, your credit report will have more plus points. If you miss payments, your credit report will be a disaster.

The rule to better credit is: PAY AS PROMISED. Whenever you take a loan, pay the instalments on time. When you sign up for a mobile phone connection, pay the bills on time. The idea is simple. If you have made a financial commitment, stick to it.

It shows creditors that you are trustworthy. In fact, timely repayment is the biggest factor determining your credit score. If you don’t miss a payment for 12 months, your credit score will improve.

Stick to the simple rule: Pay as Promised. Automate all your recurring monthly payments. You can automate bill payments for electricity, internet, etc by setting up auto payment from your credit card. This way, you won’t miss payments of your utility bills. One more thing – don’t forget to pay your credit card bills in full and on time. This is the simplest route to a stellar credit.

Pay at least monthly minimum towards all your loans. This way, your credit report will show regular payments. It will be a big positive. It not only improves your credit score, but also tells lenders that you are committed to making regular monthly payments towards the loans you take. The lenders will think it is safer to lend to you.

Not defaulting on your payments is a good starting point. However, that is not enough. Increase credit limit available to you. The rate of total available credit and utilized credit is the second biggest factor determining your credit ratings. If you take only a small portion of total credit available to you, it will increase your credit ratings.

Leave a major portion of credit unutilized. The bigger the gap between total line of credit available to you and the total credit utilized, the bigger your chances of increasing your credit score. You can ask your credit card companies to enhance the credit limit.

The credit reporting agencies will see that the creditors trust you more. This enhances your credit ratings. After committing to a regular payment plan, increase the total credit available to you. Thirdly, add variety to your credit history. When you manage different types of credit, it will also boost your credit score. The key is to pay all the instalments on time.

To add variety, you can take a personal loan. You can also buy a computer or some product on instalment. This shows that you can easily manage different loans. However, don’t take too many loans. If you take too many loans, it will appear like you have utilized most lines of credit to the maximum. It reduces your credit score.

Do These Three Things To Increase Your Credit Ratings:

1. Pay your bills on time
2. Increase total revolving credit available to you
3. Add variety to your credit portfolio

You can repair your credit in one year if you simply follow the three points above. Before you apply for a loan, you also need to check your credit report. In all probability, there will be mistakes in your credit report. The mistakes can negatively affect your credit ratings. Get the mistakes corrected and see your credit ratings going up.

At first, learn to read your credit report. Familiarize yourself with the different items. When you spot a mistake, like a wrongly entered missed payment, ask the creditor to correct the mistake in your report. Sometimes the creditors may also fail to report your good behaviour of timely repayment. Ask the creditors to report your timely payments too.

Do I Need To Use Professional Credit Repair Services?

No. You can repair your credit without getting credit repair services involved. You see dozens of advertising proclaiming the benefits of using a credit repair service. The credit repair professionals may be aggressive in helping you. They may choose to challenge all the negative entries in your report. However, it doesn’t help. If the information in your credit report is accurate, there is no way a credit repair professional can remove it from your report.

There are also illegal practices like building a brand new credit history by establishing a brand new identity. This usually is an illegal practice. You will end up with legal problems in addition to the already mounting financial problems.

You can repair your credit yourself. You don’t need any outside help to repair your credit. Don’t ask if it is possible to repair credit in a year. The answer always is, ‘you can’.

Don’t look for shortcuts. Prove to the creditors that you are capable of paying your bills. Always be sure of making your monthly payments. Keep the lines of credit open. Finally, watch out for discrepancies in your credit report. That is the only way to establish your credit.

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