The steps toward fixing bad credit take time, effort and money to successfully complete. So, when someone offers to fix your bad credit in no time at all for a small amount of money, then we suggest running in the opposite direction, so to speak. Many sharks prey on the desperation of people to fix bad credit, unfortunately. You must adopt the following steps so as to get rid of your bad credit without the sharks making your problem worse than it already is.
- Your first step is to look at your updated credit report and when we say look, we mean close assessment of the entries that comprise it. Go through each entry, determine its correctness and then take note of any possible errors that can be taken up with the credit reporting agency. In most cases, the report contains errors like payments that have not yet been reflected, items that are still in dispute with other entities, and even inaccuracies that are eventually attributed to similar names between two individuals. Identity theft may even be an issue uncovered by the close scrutiny of the credit report. Keep in mind that credit reports are always subject to inaccuracies, inconsistencies and fraud.
TIP: To get a free copy of your credit report from the 3 major credit reporting agencies: Equifax, Experian, and TransUnion, click here.
- When you have taken note of the possible errors, you must take it up with the concerned credit reporting agency for corrections. You will be required to submit a request letter together with the proof to support your allegations of inaccuracies on your credit report – bills, receipts and other valid documentation from third parties work well. When your claims are deemed worthy of merit, the concerned agency will take the necessary measures to correct the entries on your credit report and, thus, result to better credit for yourself. This process takes time and effort so be sure to have an attitude of stick-to-itiveness.
- However, the second step is made with the assumption that your credit report shows items that can be contested with the credit reporting agency. If the unpaid debts pulling down your credit score are clearly your obligations, you must take responsibility immediately. Contact your creditors, tell them of your willingness to pay your debts and then work out a favorable repayment plan. Take note that creditors are almost always willing to work with their debtors toward an amicable debt resolution for a logical reason – it is better to receive the total amount of the debt than to sell it at a discount to the debt collection agency.
- Of course, you must pay the unpaid balances on your debts. This is the most obvious way to get rid of bad credit and yet often the most overlooked. In order to facilitate the payment process with as little pain as possible, start paying the debts with the highest interest rates while also making micro-payments on the other debts. This way, you can save money on the interest, which can then be directed towards the principal amount itself. If your present income cannot support payments on the debts, your best bet is to find part-time jobs that can either go toward your daily expenses or toward the debt itself.
- Obviously, your credit score will not improve if and when you continue to add unpaid debts to your account. While paying your old debts, be sure not to add any more new debts lest you find yourself unable to pay all of these debts on time. And then you are back at square one. To avoid this particular trap, limit your spending by paying with cash, shopping with a list and sticking to it, stripping away the luxuries and even hiding your credit card to avoid temptations.
