If you’ve experienced foreclosure, missed credit card and mortgage payments, have kept high credit card balances for years, and have outstanding student loans, it’s probable you have bad or below-average credit. Poor credit makes it difficult to receive low interest rates and better credit card products.
It’s highly likely you’ll still qualify for a mortgage or an auto loan, but you’ll suffer because you’ll have to pay higher interest rates due to your poor credit score. When compared to a borrower with a high credit score, low score borrowers with higher mortgage interest rates could pay $50,000 or more than the person with a lower interest rate.
To fix this problem, please take the following steps to beef up your credit score and qualify for lower interest rates.
Step #1: Run Your Credit Reports & Check for Errors
Running your credit reports is the first step. You must check your report on all three credit bureaus to discover where you need the most help. By doing this, you’ll discover if there are any errors on your report. If there are, you can take the necessary steps to dispute them, which will provide a boost to your credit score.
Take time to thoroughly review your credit history list on each report. Make sure there are no questionable items or mistakes. If there are, write a letter to the credit agency in question, include a copy of the highlighted report, and submit this letter via certified mail.
According to Repair.Credit, a website teaching readers how to repair your credit for free, “Having your credit report dispute resolved will take some determination on your part. If you do not receive a response to your inquiry within several weeks, it is a good idea to send a follow up notice.”
Step #2: Stop Making Mistakes That Hurt Your Credit
Enough is enough already. It’s time to get serious about your credit score. If you continue to make the same mistakes, you’ll continue to have a poor credit score. Or, if you get serious about your credit score, you’ll start paying your bills on time, work toward paying down your credit card debt, and you’ll stop applying for credit altogether.
When you go this route, good things are going to happen. Your creditors will notice the improvements you’ve made, and you’ll ultimately begin to look like a safer credit risk. With enough time, your credit score will improve as your mistakes begin to fall away.
Step #3: Work on Paying down Your Credit Card Balances
When your outstanding credit card balances are too high, you must take this seriously and begin to pay down those high balances. Experts say you shouldn’t use more than 30% of your available credit. If you do, it reflects poorly on you and has a negative impact on your credit score. So pay down your balances and work toward getting them below 30% of your available credit.
Please use this three step process to fix your bad credit and improve your overall credit score.
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