By Manuel Tovar, June 16 – Hispanic Solutions Group
Some specialists on the subject agree that you don’t need to be a financial wizard to successfully fix your credit. And they say that the secret is to be proactive, so that you don’t stay in the same position forever.
Below, our credit specialists from Hispanic Solutions Group Here are 10 tips to help you get started with repairing bad credit:
1. Check your credit report for mistakes
Download a copy of your credit report to make sure there are no inaccurate negative items. According to Consumer Financial Protection Office Common mistakes in credit reports include closed credit accounts showing as open, debts appearing multiple times, and incorrect balances. If you detect any incorrect information on your credit report, you can dispute it by writing a letter to the appropriate credit reporting agency. The Federal Trade Commission has a sample credit dispute letter that you can refer to if you are not sure how to do it.
2. Examine the statutes of limitations
Check your credit report for bills you may have overlooked or bills you may have forgotten. Verify that the statutes of limitations on your debts have not been exhausted; If enough time has passed, it could prohibit collection agencies from suing you. (We suggest consulting with a specialist lawyer to confirm).
3. Reconsider your credit utilization ratio strategy
Your credit utilization ratio measures how much credit you are using relative to the overall credit limit you have at any given time. This proportion should never exceed a third or approximately 30% of your spending limit. Example, if you have a total of $ 1,000 of credit available, you should not use more than $ 300.
4. make a plan to pay all your bills on time
Payment history makes up 35% of your credit score, so addressing late payments and planning for the future is crucial. It is the first piece of advice given to new clients. You should also prioritize the payment of any credit card account in the collection. “You have to pay them in full as quickly as possible to increase your score because they will just stay there make you do it,” it is recommended.
5. Become an authorized user of someone else’s credit card.
An authorized user is someone added to an account credit card existing with someone else’s name. Authorized users can use the card as their own, but are not responsible for any credit card debt they accumulate. And since they share payment history and card utilization rate, this can increase your credit score over time. The financial risks here are primarily for the cardholder, not the authorized user. But as someone trying to build credit, you should ask yourself some “awkward questions” before closing the deal, like asking about the person’s payment habits to determine if this is the right decision for you.
6. Use a program to improve your credit score
Some programs can increase your score FICO by expanding your credit file. They do this by including alternate information as part of your credit report. This is data not typically found in traditional credit scoring models.
7. Use a rental reporting service
If you have been paying your rent religiously, you can use it to your advantage. Some landlords, particularly those who manage multiple properties, tend to use platforms to keep track of their tenants’ payments. These platforms also allow them to report rental payments to credit bureaus.
If your landlord does not use a rental tracking platform, you can subscribe to a rental reporting service such as RentReporters. These services post your positive rental payments on your report for a monthly fee.
8. Consider debt consolidation
The debt consolidation consists of grouping all your debts into one. This often leads to a lower interest rate or a lower monthly payment compared to individual bills. This payment strategy is beneficial for those who have trouble making formulas with multiple expiration dates or have multiple high interest credit card balances.
9. You avoid bad habits
Don’t apply for many new credit cards or close multiple old accounts without a general strategy. With credit, everything is connected, so closing old accounts and opening new accounts could hurt your credit history and mix.
For example, applying for multiple new credit cards over a very short period of time could result in repeated inquiries, which can lower your credit score. Instead, consider getting a loan to build credit or acredit card guaranteed.
10. You must be patient in your management
Rebuild bad credit it is not a quick process. Negative marks or delinquencies, such as late payments, can stay on your credit report for up to seven years, while some types of bankruptcies can stay on your report for up to a decade. It may take a few months, or even years, for a person to build their credit, but it is doable with some effort, so you should be patient.
Finally, the most important thing is to be patient, as there are often people who are so eager to fix their credit that they end up making hasty decisions that lead to crucial mistakes. To avoid these errors and others we invite you to contact us.
We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram to find more information related to finances. Also on our YouTube channel The Credit Channel to learn how to improve your credit. If you need help in repairing your credit, disputing debts that do not belong to you, or other services, call us at (612) 216-1599.