It would be wonderful if we were all able to buy everything we wanted or needed with cash, but very few of us actually have that luxury. The reality is that most of us have to take on some form of debt in order to get all the things we need. Before that credit will be extended our way, though, lenders will look at your credit score to decide whether or not extending you credit is a good idea. Paying all of your debt on time will help keep your credit score high, but what happens when it dips to lower levels that begin to hurt your chances of a loan? While it can become an issues that are ways to fix your credit score and get it back where it needs to be.
Before you can take on the task of repairing your credit score, you need to take a long hard look at your current financial situation. What you need to do is take inventory of all your debts, how much you have to pay on them each month and then break them into different categories. You start out with essential payments, which include the likes of your mortgage, car payment and utilities. You should then make a list of expenses that are perhaps not essential, but which add up each month, which normally means social type spending. The next step is to look at your total income each month and see what the difference is between expenses and revenues.
If the balance falls to far towards the expenses side, start looking for ways to trim. That might mean cutting back on going out, or perhaps eliminating some of the unnecessary items on your cable bill.
Taking that inventory and making the necessary changes will allow you to pay all of your bills on time, every time. This is more important than you think, as simply falling behind a couple of weeks on a single loan can have a devastating effect on your credit score. Imagine how low it will go if you are behind on two or three different accounts. Making cuts to your spending will also allow you to pay a little more than the minimum payment, which has the dual effect of improving your credit score and getting your loans paid off that much quicker.
The final step in this process is to resist all other loan offers that are sent your way, no matter how good they may sound. Credit card companies in particular will offer to extend your credit level, and will it may seem like a great idea in the short term, all it really does is raise the temptation to spend money you don’t have. It then becomes a slippery slope that leads you back to where you were at the start of this process, potentially hurting all of the good work you have done in repairing your damaged credit score.
Your Access to Free Credit Reports and Credit Scores
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.
A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.
Here are the details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program.
Q: How do I order my free report?
You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.