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    Dennis#MD
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    How to Repair Your Credit Score on Your Own

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    If you are in the market to buy a home, purchase a car or start a business, you will need to cough up some money.

    Unfortunately, this money for most people isn’t just lying around and can’t be casually spent all at once. Which is why many people apply for a loan for some financial assistance.

    Whether you are applying for a mortgage, car or business-related loan, your lender of choice will evaluate you. They will take a look at your income, employment history, bank statements and more. But, most importantly, they will look at your credit score.

    Your credit score is composed of three digits that resemble your credit risk, which is the likelihood that you are going to pay back the dollar amount you agreed upon.

    In the United States, credit scores are heavily used as a tool to objectively and consistently evaluate potential borrower’s risk.

    Ideally, you want a high credit score, simply because the stronger your score is, the better the interest rate and loan you will qualify for.

    If you have a lower credit score, you will be classified as a high credit risk, which makes it more difficult for a potential borrower to receive decent interest rates or even get approved. 

    Because your credit score plays an important role in major lending decisions, it’s important to maintain a high score. 

    If your credit score isn’t as high as you would like, there are several ways to improve it. 

    Here’s how to repair your credit score on your own:

    Catch up on payments

    The easiest and quickest way to repair your credit score is to catch up on any missed payments.

    If you have any outstanding bills or late payments, pay them as soon as possible and in full. Once you have taken care of these debts and are current on all payments whether it is for student loans, car payments or hospital bills, your score will positively change.

    To maintain a good credit score, never miss a payment. If you were to miss a payment, the credit bureau will factor in how many days you were late and the dollar amount. So, the longer you delay a payment, the more it will negatively affect you.

    Avoid harming yourself and credit score by always paying on time and in full. If you have troubles remembering payment dates, you can sign up for automatic payments. This approach will never allow you to miss a payment, so you won’t have to worry about damaging your score.

    Long story short, if you have missed a payment, get current and stay current.

    Manage your credit

    Managing and organizing your credit will greatly impact how your credit score will look.

    Having a variety of credit is helpful when applying for a loan because it shows lenders that you can handle managing several lines of credit. This can benefit you only if you responsibly monitor your payments.

    However, it becomes a problem when you can’t keep up with payments or are unable to manage your balance-to-credit-line ratio. If you exceed the amount you have agreed upon, it raises a red flag to lenders that you are a high-risk borrower. 

    Limit yourself by reducing your balance on any credit card you own by either transferring part of the balance to a different account or prioritizing what you absolutely need to spend money on.

    If you decide to follow through with any lending process, do not apply for any new lines of credit or a different loan. Any new lines of credit or loan obligation can harm your credit score. Rapidly opening too many lines of credit within a short period of time can signal that you are a risky borrower.

    Don’t close old accounts

    It may seem logical to close old credit card accounts that have low to zero activity, however, this is not the smartest move. 

    If you think closing an old account can improve or eliminate the chance of showing up on your credit score, this is false. Closed accounts will show up on your credit score. Which is one of the reasons why you shouldn’t close old accounts.

    Another reason keeping older accounts alive is because of its maturity. The length of credit you have can actually strengthen your credit score, even if it has been unused for a few months or few years.

    Like mentioned before, having a mix of credit is a positive contributor to your credit score. Just make sure the balance is low and no additional payments need to be made.

    Check your credit report

    Get right to the source and find out what your credit score is. Checking your credit score is commonly believed to be harmful to your score.

    This is not true. It is O.K. to check your credit score as long as you order your credit report directly from a major crediting bureau or an organization that is authorized to retrieve and provide these reports to consumers.

    Request a credit report and carefully review what is concluded. The information displayed will contain your personal information, bank accounts, inquiries and debts. 

    There is a chance your report may contain errors regarding this information. If you happen to find a mistake, contact your crediting bureau to address the issue so your credit score can accurately reflect your credit risk.

    Edited by Dennis#MD


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