If you get into a bad credit predicament, you cannot just duck your head and hope that this passes over. You must actively work to fix your bad credit and work with and improve your credit score. If you want to open a bank account, want to buy a major appliance, rent or buy a home, all of this will require that the business look into your credit and check your credit score. Your credit score lets the business know if you are a good risk or not, mostly from the standpoint of whether you are likely to pay your payment or have a problem. So if you are planning to do business, with just about anybody, you need to fix any bad credit you have and check your credit score. Tip 1. Ask For Your Credit Reports Contact the three major credit bureaus and order a credit report. You need to know your credit score and find any errors, which you can dispute and have fixed. The central site that allows you to request one free report each year from the three main bureaus can be found at https://www.annualcreditreport.com/cra/index.jsp I rotate my request and get a free one every four months, so this allows me to check my credit score and dispute any errors with each company once a year from that. If I need more information during the year, I can always pay for a report or call the credit bureaus. Tip 2. Look Over Your Report With your credit score in hand, now you can see what might be causing the problem. Make yourself notes and underline what you see. If there are errors, write the credit bureau with a dispute and follow up in thirty days to see that it was taken care of. Maybe you have unpaid bills. Perhaps you have too much debt overall, or another reason could be that you are young and have not established much credit. If you have defaulted on a loan, are dealing with a collection agency or missed a payment on a credit card, this is of course going to be reflected in your score. Tip 3. Pay Your Bills On Time Pay your bills on time. While simple, it makes for an improved credit score. Lenders and business people want to see you meeting your bills and paying on time. As a side note, any payment that is due a company that charges interest, is best paid the day you get the bill. This will save you on interest charged (save money), by paying a little early on it, as well as help avoid a late payment, which will show up as bad credit. It is thought that up thirty five percent of your credit score is about your paying your bills on time. So this is a very important step. Tip 4. Avoid Excessive Credit Use Where Possible Here is something to remember, even if you are paying your bills regularly. You make your credit risk worse, when you are close to overextending your credit. It is a flag that you may be taking on more credit than you can pay off to a lender or businessperson. Anyone who is calculating your credit score will figure that the more debt you have and the closer you are to your credit limit, the higher risk you are and may pull back from dealing with you. Ideally, use no more than 50% of your credit. This will keep you in the safe zone. Tip 5. Pay Your Debts Down Forgo some things that you want, but can get by without, such as a new sound system, eating out most days or buying new clothes you don't really need. Find ways to work around making purchases and add this money to your funds to pay your debts down. It takes some willpower, but it will take the stress off of you knowing your credit is bad and the problems that come with that, such as getting notices in the mail, being denied renting an apartment, or collection agencies calling you and putting pressure on you. Start with any delinquent bills and get them paid first. Then you could either start with your biggest bill you have and pay more on that each month, or pick the bill that carries the largest amount of interest per month. Find ways to cut expenses and add this extra money to your payment each month. This is doable. You just need to write down what you owe, take your credit report in hand and make a plan as how to pay your bills down.
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