Fix Your Poor Credit And Improve Your Credit Rating (Dorothy P Taylor)
Jun 15, 2010
At this time there are thousands of people that are having difficulties with negative credit. The recent economy has been detrimental to many people's credit histories. However, all is not lost. There are several steps you can take to improve your credit rating scores and your credit reports.
In the event you look at your credit report you will notice a history of how you have handled your finances in the past and how you are currently dealing with your finances. It shows how much you owe and how punctual you have paying your debts. It also shows how much debt you have accrued compared to how much credit available for you. You will get a free copy of your current credit report from each of the three main credit-reporting companies one time every year.
Your credit rating is compiled from the information contained on your credit report. The score is a numerical rating that gives lenders an indicator of your predicted creditworthiness based upon your past history, your debt to available credit ratio and how much debt you currently have. Even though there might be some changes coming, right now you usually must pay to get your FICO credit score.
Prior to embarking on any kind of credit repair it is vital to make sure you're secure in your income and finances. Your income should be dependable enough and sufficient enough to cover all of your debts and expenses with some free money to spare. If your income and budget has not fully recovered from your previous difficulties, all your credit repair efforts will be in vain.
But if your finances have recovered and you have control of your budget then you are ready to take some steps to improve your credit rating. First off you need to get a copy of the credit reports from each one of the three main credit-reporting agencies, Experian, Equifax and TransUnion. You will need to get all three because they all are different. You will get the free report or you may also pay to get a tri-merged report.
Once you have your reports in hand, you will have to check them methodically line by line. It has been estimated that the error rate on credit reports is as high as 79%. Which means that your report likely contains errors that are bringing down your credit even more than your own problems. You will want to get started with disputing these errors right away because it takes time and expertise to get them removed.
It's also important to focus on your current debts. You may not need to pay them off completely but it will significantly increase your score if you pay them down to below 20% of the available credit. Your credit rating is heavily influenced by the debt to available credit ratio and below 20% appears to be the number to strive for. Don't cancel any credit cards or close any credit lines yourself simply because this particular debt to available credit ratio will be affected.
You may also begin working on getting new credit. If you're unable to qualify for a regular credit card or loan you can look into obtaining a secured loan. Within about 6 months of diligent effort it is possible to substantially improve your credit rating.
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