How to Fix Your Credit

When the time comes to apply for a home loan, banks and lenders are going to look very closely at how you have managed credit in the past.

The easiest and most obvious way for them to do this is to look at your credit score, which is a track record of how well you’ve handled it previously.

If you’ve been known to miss payments here and there, or worse, then there is some chance your credit score has been hurt. The good news is there are a few things you can do to improve your credit score and get things back on track, so you have the best chance of being approved for finance in the future.

Know the Score

You can’t start to improve your credit score without knowing what it actually is. The good news is that finding out your credit score is easy, and it doesn’t cost anything.

Get in touch with one of the major credit reporting agencies and ask for a report. It’s normally possible to get one free report on your credit score each year, which should be more than enough.

Fix the Errors

Sometimes your credit score can be low for reasons that are not your fault. If any errors have been made, it’s important to identify them and get them fixed.

For example, if you’ve paid a debt or bill in full, and it is not reflected correctly on your credit record, it will lower your credit score. Contact the credit agency and have them investigate the matter.

Money Owing

A lender is able to report any money that is overdue by 60 days as a default, if it amounts to more than $150. This can reflect on your credit report for five years.

If there are any late payments that are not accurate, follow it up with both the reporting agency and the creditor.

Pay Bills on Time

One of the quickest and easiest ways to improve your credit score is to simply pay your bills on time. These days, the reporting agencies can see exactly when you paid your bills, and they will take this information into account.

If you can pay your bills early, that is even better. A good rule of thumb is to pay your bills the moment they arrive. This can really help. If you wait until the last day to pay a bill, by the time it is processed, it is likely to be late already.

Use Credit Sparingly

If you continually apply for credit or loans of any kind, these will not only show up on your credit file, but will also lower your credit score.

If you have applied for credit and have been rejected regularly, this will make it very difficult to get finance in the future, as lenders can see what has been happening.