How to Repair Your Credit

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Having a good credit score is a big deal. It helps you do things like purchase a new car or put a down payment on a house. If your credit score is below average, learn how to repair credit in six months or less with these helpful tips.

Request Your Free Credit Report

The first step to repairing your credit is to stay updated on your credit score. You can request a free credit report once a year from the top three credit reporting companies. Your credit report doesn’t just reveal your score. You’ll be able to see your individual lines of credit, the age of your credit, how many payments you’ve made on time and which accounts are negatively impacting your credit. Reviewing your free credit report will help you become knowledgeable about what changes you need to make in order to repair your credit.

Start With Past Due Bills

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Improve your credit drastically by managing past-due bills. Delinquent accounts significantly hurt your credit and make up 35 percent of your credit score, according to The Balance. Try getting all past-due accounts into a paid status within three months. Payments that are 180 days late may be sent to a collection agency, which also significantly hurts your score. These mark-ups also stay on your credit report for up to seven years. Settle these past-due accounts right away to see bad credit score improvement.

Lower High Loan Balances

Another secret to credit repair is to pay off high interest, newer accounts first. Not only does this improve your credit score, it also decreases the amount of interest you’ll pay over time. Paying off high-interest accounts puts money back in your pocket at the end of the year. Focus on past-due payments from lines of credit like car loans, mortgages and credit card bills. These are most likely to be reported to the credit bureaus if they are in a past-due status, anyway. It’s also important to show that you can responsibly pay off debt with consistent, on-time payments.

Open New Credit

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Sometimes opening a new line of credit increases your score. Credit reporting companies look for the age of credit as well as how many types of credit you have. This includes credit cards, student loans, mortgages and more. Once you’ve made payments on past-due bills and have current accounts, try opening a new credit card to increase your utilization ratio. Make sure you don’t spend any extra on this new account, as it is just to increase your score temporarily.

Dispute Any Errors

Make sure you keep an eye on your credit report for any mistakes. Mistakes do happen and sometimes lenders enter incorrect information when reporting. If you feel that a past-due bill was entered incorrectly or there is an error on your report, you can choose to dispute this. Get in touch with the lender or bank about the derogatory mark. Ask them to check their records against yours for proof of the error. Start an investigation with the credit bureau regarding the error to determine if your dispute is legitimate.