How to fix bad credit and why you should!

Why would you want to fix bad credit? Having bad credit can impact every single aspect of your life. Getting a car loan can be tough, getting a house can seem nearly impossible, and certain businesses refuse to hire people who have poor credit. This makes fixing bad credit a need, not a want. If you are looking to fix a bad FICO score, there are plenty of ways to do this. Follow some of these tips, and your credit score can improve by hundreds of points.

• Did you know that you can negotiate some of the transgressions that go on your credit report? If you have medical bills that you have defaulted on, or are late when it comes to paying, call the collection agents and talk to them. Many times, if you pay the bill, you can get the delinquency erased off your credit profile. This is called “pay for deletion.”

• One of the easiest ways to fix bad credit is to pay off a significant portion of your credit card debt. Credit card debt is also the most important form of debt that credit agencies pay attention to. Most credit agencies penalize people who use 33% or more of their total credit limit. If you use 40% and can pay off 8% of your total limit, you can get a boost to your credit score. Below are some good tips how to fix bad credit.

How to fix bad credit the right way.

• Credit agencies, contrary to popular belief, aren’t always right. If you see a charge that you don’t recognize, dispute it. Write a dispute letter, copy it, keep one copy for your own records, and then send another copy to the credit agencies. Some credit card companies also allow you to dispute it online. You shouldn’t have to pay for fraudulent charges, and you shouldn’t have to have a bad credit score because of them, either. You’ll be surprised how quickly you can use this to fix your bad credit score.

• If you cannot fully pay a bill that you are delinquent on, pay a small portion of it, call the creditors, and tell them that you are working on paying the debt off as quickly as you can. Believe it or not, collections agents will often help you if they hear you are trying to fix your bad credit. The fact that you are making an effort to pay off debt will be reflected in your credit profile.

• As tempting as it can be, don’t close your credit cards, especially if you have had them for a long time. If you managed to pay off a credit card, just pay the annual fee. Closing a credit card can actually hurt your credit score. If you’re trying to fix a credit score, it’s counterproductive to hurt your FICO score by closing a card.

• When you have unpaid judgments, it’s important to pay them off as soon as you can. Unpaid judgments can seriously hurt your credit score, especially after 60 days. Sometimes, all you need to do to fix bad credit is to pay off a judgment.

• A common problem that is affecting many recent grads is college loan defaults. Defaults don’t have to be permanent. Calling the bank in charge of your student loans and coming up with a payment plan will help fix bad credit scores. Of course, your credit score will only improve if you make timely payments every month.

• Don’t get discouraged. Getting your credit score fixed takes time. Sometimes it takes months, sometimes it takes years. Certain actions (paying off large amounts of debt in one sitting, pay for deletion) will boost your score almost immediately, so try those methods if you need a morale boost. Remember, good credit is takes years to establish.

• The best way to help lower credit card debt (and fix a poor FICO score) is to avoid using credit cards. If you pay the minimum, and add new charges, your credit balance is never going to get better. Opt for a debit card whenever possible. Some people who have taken this route even cut up their credit cards; this drastic move isn’t suggested.

• Take a part time job, or find a new form of passive income in order to help pay off credit cards and debt. It may sound obvious, but if you can do it, by all means do. More money means more debt paid at a faster pace.

It does take time to fix bad credit, but it’s time well spent. With a lot of effort, a lot of negotiation, and a lot of time, it’s possible to fix a poor credit score. Who knows, you might eventually get a 750! The fact is that FICO scores are extremely flexible, and they are forgiving.Your credit score isn’t doomed. There are even stories out there of people who have filed bankruptcy twice and still managed to get credit scores over 700 after a couple of years. As long as you really focus on how to fix bad credit, it’s possible to become one of those success stories.