How to fix Bad Credit? The question of course is whether you can actually fix poor credit. There are a lot of companies offering to “fix” your bad credit for you, for a fee of course. But the truth is that a bad credit history cannot be fixed quickly. Your poor credit is generally a direct result of your own poor economic choices over a period time.
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"Money is a good servant but a bad master."
- Francis Bacon |
The mistakes you have made in handling money, the lack of self-discipline you have shown, your inability to live on what you make, has finally caught up with you in the form of a bad credit report. So don’t expect to simply fix bad credit by paying a fee to someone. Your credit report is of high importance to your financial life if you utilize credit products. Potential lenders and credit card companies use the credit report to evaluate potential risk factors. Even many employers today are starting to conduct a credit check of all potential new hires. Credit reports and scores are also being used to determine prices of insurance premiums for potential customers. Establishing and maintaining good credit is extremely important today. Good credit means good rates when buying a home, a car, or insurance, finding a decent apartment or getting a good job. Most importantly, it takes time, both to create good credit as well as fix bad credit. The smallest error on your part, a single missed or late payment, one time maxing out your card, or even sending in too many applications for credit all at once, can impact the quality of your credit rating for years. A negative mark, will remain on your credit report no matter what you do, until it is removed, between 7-10 years later. Anyone who says they can remove these now is running a scam. They cannot fix bad credit so if they tell you they can, BEWARE. A good credit score can save you thousands of dollars in interest payments, while a bad score can cost you just as much, or even prevent you from getting credit altogether. (Which may not be such a bad thing, really.) But there are no quick fix answers. Your credit score is an analysis of your past use of credit. The payments you have made on time, and how much of your available credit you use, are both important. Raising your bad credit takes time and concentrated effort. Quick-fix efforts can and do backfire and the best thing you can do is to manage your credit more responsibly. Save more money and improve your credit by taking the right steps to fix bad credit over a period of time. First and foremost, pay every single one of your bills on time. A person’s payment history is the most important thing for their credit score. If a bill is overdue beyond 30 days, it shows up on your credit report. A pattern of late payments may raise your interest rates even for a card you have paid off on time. Do not accept offers to skip payments on your bills. If you accept, the interest just adds up on your balance. Get current and stay current. Reduce as many credit-card balances as possible. Consumers sometimes think that maxing out a credit card improves their credit score, but it doesn’t. The closer you get to your credit limit; the more negatively it impacts your score. Try to keep balances below 30% of the available credit. To boost your score, it is advisable to keep unused cards in a drawer, instead of closing out the accounts. This improves your debt-to-credit ratio, which reflects positively on your score. In summary, there are no quick fixes. There is no one in the world who can fix bad credit for you. But you can improve your score over a period of time by following the above advice. Of course the best advice is to stay out of debt and live debt free.
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"No man's credit is as good as his money."
- Edgar Watson Howe |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
