Bad credit can really ruin your life. It can cause you to be unable to get a home loan or a car loan. It can even keep you from getting the job of your dreams, since more and more employers are checking credit reports before deciding who to hire. You don’t have to let bad credit ruin everything, though. You can actually fix it, as long as you have the right tools and the right steps to follow.
Step one of fixing your credit is knowing exactly how bad the problem is. This means that you need to spend time looking over your credit reports and credit scores. Sometimes when you do this, you’ll find that part of your problem isn’t your problem at all. Sometimes part of the issue is mistakes on the part of the credit reporting company. It’s estimated that about 70% of credit reports contain errors, some of which dramatically change a person’s resulting credit score.
Step two of fixing your credit is starting to address the problems you can work on right away. One of the major reasons people have a bad credit score is because they don’t pay bills on time. If you can’t make the payments, you might need to cut out unnecessary things like your cable and Internet bills. Another option if you have trouble with cash flow is to rearrange your due dates, if possible, so that they are due after your paychecks. Of course, you can always do it the old fashioned way and save some money to pay next month’s bills, too.
Another major reason for bad credit is a high debt to credit ratio. This means that on revolving debt like credit cards you’re carrying high balances relative to the credit you have available. It’s best to carry less than 50% of your overall credit allowance. Any more than that, and your credit score will definitely suffer. The best way to deal with this problem is to simply pay down your credit cards as much as you can.
Finally, there are some things that you just have to wait out. You can’t get rid of a bankruptcy on your report for a certain number of years, depending on which type you filed. You also won’t be able to get rid of things like notices of late payment until they are off your records in a few months or years, depending on the situation. You need to do what you can, and the rest of these things will take care of themselves over time.