If you want to borrow money or buy a home, you’ll need good credit. And if you’re looking for a job, your credit may determine whether you can get hired or receive a bonus or raise. But repairing bad credit takes time and dedication — and it’s not something that can happen overnight. You can improve your score by tackling several tactics, from ordering credit reports and fixing errors to paying bills on time.
Credit scores rely on information on your credit report, including how much you owe, which loans and credit cards you have and how long you’ve had them. Getting a handle on your credit is essential to a strong financial future, and a good score will help you gain access to loans and credit cards with better interest rates.
The most important factor in a FICO score is payment history, accounting for 35% of your score. Missed payments can linger on your report for seven years, so it’s essential to make them on time. If you’re having trouble keeping up, consider setting up autopay on all of your accounts to avoid missing a payment.
Another way to repair your credit is to limit new credit. Your credit score can take a hit when you apply for too many new cards and loans, as lenders may believe you’re in financial trouble and not lend to you. If you’re having trouble, try to limit your applications for six months to give your score a chance to recover.
A high debt-utilization ratio, which is a percentage of your available credit that you’re using, can also hurt your credit. If you have credit card balances that are over 30% of your available credit, pay them off as quickly as possible to lower your utilization and improve your score. If you can’t do it on your own, consider a personal loan to pay off the balances you’re carrying; though it will cause a hard inquiry that could ding your score temporarily, it should be a short-term solution and help boost your credit over time.
If you’re struggling to fix your credit, it can be helpful to work with a credit repair company. The best credit repair services have licensed experts who can do the heavy lifting of obtaining your credit reports, finding inaccuracies and disputing them with creditors and the major credit bureaus. Depending on your state, the best credit repair companies are often non-profit organizations that have worked with thousands of clients, according to Money. If you choose to work with a credit repair company, be picky about which one you choose and request details on their fees, specific pricing, services and products. how to fix credit score