Your credit history is also the main factor determining your overall score. Therefore, you must repair it accordingly. Your credit history is divided into categories based on the data used to calculate your credit rating. These categories can help you correct your credit history comprehensively so that your credit recovery process is successful.
Check your Keenly Credit Report
Begin the repair process by carefully checking your credit report. This check is intended to identify any errors that significantly affect the assessment. Make sure that there are no mistakenly listed late payments and that all outstanding amounts for each of your open accounts are correct. If you find any errors, you should immediately raise a dispute with the credit bureau.
Set up payment reminders
Timely repayments of your debts contribute significantly to your credit rating. Some financial institutions send emails and text messages with reminders that allow you to make payments on time. Although you can sign up for automatic payments debited from your bank account to avoid late payments, this does not mean that you have good money management skills.
To achieve this feat is easier said than done. Nevertheless, reducing your debts gives you a sense of satisfaction more than helps in the loan repair process. First, stop using your credit cards and check all your accounts to determine how much you owe and what interest rate each of your accounts charges. Come up with a plan that allocates more money to accounts with higher interest rates and supports lower payments on other accounts.
Payment History Tips
In the past, there was no legal way to track consumer credit activity. However, Fair Isaac Corporation has developed a credit scoring system known as FICO. Since the three major credit agencies have different information about each consumer, the FICO scores calculated by these agencies are not equal. A payment history contributes up to 35% to your FICO calculation. Despite the fact that they have such a high percentage of influence on improving your account, past cases of missed and late payments are not easy to fix.
You can begin credit recovery by making sure your late payments are made on time. If you had late payments, you should avoid any late payments in the future in order to positively affect your account. Timely payments over time neutralize late payments, as your good payment schemes will show that you have significantly improved your credit management strategies. Always remember that even if you pay with a collection account, it will remain in your credit report for seven years. Whenever you are facing a financial crisis, contact your creditors and legal credit counselor to restructure your payments to match your low income.
The amount of debt you owe is 30% of the total credit rating calculation. This category can be cleared more easily than the payment history, but this will require strict financial discipline. Since a high level of outstanding debt can affect your credit score, you should keep all your credit cards and revolving credit balances low. In addition, you must pay your revolving credit, and not move it.
Never close unused credit cards to quickly raise your account, as having the same debt will result in fewer open accounts, which can significantly increase your account. In addition, you should not open new credit cards that you are not going to use only to increase your affordable credit. While this may seem like a brilliant idea, a strategy can be unpleasant and significantly lower your credit ratings.
Financial experts advise that if you managed your loan for a short time, you should not open new accounts too quickly. If you open new accounts, they reduce your average age, and this significantly reduces your credit rating, given that you have little other credit information. Moreover, the quick creation of an account makes you risky, especially when you are a new loan user.
Always place bets for a limited period of time, as FICO points distinguish between searching for one loan and searching for many new credit lines. To improve the process of credit recovery in the long run, you can open new accounts in a responsible manner and repay them in a timely manner. It is also advisable to order your credit report directly from a credit reporting agency or from consumer credit reports provided by authorized organizations. Receiving your report in any other way may affect your account.
In conclusion, you must correct errors in your credit history in order to begin the process of credit recovery. Then follow all the recommendations that will allow you to create and maintain a consistent, good credit history. However, in order to restore and raise your credit rating, you will need patience and discipline.