How To Fix Bad Credit Score

Check credit reports

When was the last time you got a copy of your credit report? It's absolutely free to everyone once a year, so why not amend any errors that may be keeping your credit score down? It only costs a few bucks, and the sooner you get it, the better.

Check for inaccuracies

Over one in three credit reports have inaccurate information, including items that should be still on your report and items that should have been removed. Finding items like this can be slightly difficult, but if you follow these steps, you will be able to get them fixed in a matter of minutes.

Pull out your credit card report

Do you know what your credit card balances are? If you do not, then you need to pull all of them out and take them out one at a time. You would be amazed at how many are out there, so if you do not take these out and focus on getting rid of that number, your credit rating will improve.

Don't max out your credit cards

Many people who have problem with their spending choose to take out one or two credit cards to help themselves curb expenses. They understand how interest works, so they avoid charging over half the credit line each month but cap it at 20%. This is a good way to avoid maxing out a card and thus getting yourself into a high balance.

Don't close old card accounts

When you close an old account, it will look like you are not dependable with your finances. When you close a card, it also lowers your total available credit, so if you have a total available of $40,000 and have a credit card with a balance of $25,000, you'll take on $15,000 a year in credit card balance as you stop making payments on it. Keep these close to your desk for emergency, but make sure they stay open and enjoy them for that extra cash each month.

Settle up with old creditors

If you owe money to a bank or credit card company and are behind in your payments, try calling them up and asking to make a settlement such as a lower interest rate on payments, waiving the monthly payment a couple of times, or setting up a payment plan. Earn their trust again and work out a payment plan before paying a cent.

Don't risk it with new credit

If you are thinking about getting an equity line of credit, make sure you don't confuse a line of credit with a personal loan. While the terms will be similar (the main difference being that a line of credit will allow you to "step up" your payments as you use the equity line) the costs are generally a lot higher. If you need a car, get a secured personal loan and pay off your credit cards.

What are your options for fixing a bad credit score? These are just a few of them, and they will all add to the overall cost of having bad credit.