Before you apply for a mortgage, loan or credit card, you need to take steps to improve your credit history. A poor credit rating can be overcome by correcting mistakes on your credit report and managing your credit obligations differently. There are no quick fixes, but you can reduce the cost of borrowing and increase the likelihood of creditor approval in the future.
How to correct mistakes on your credit report
Access to my credit report under the Fair Credit Reporting Act
Americans are legally able to get hold of a copy of their credit report once a year from Experian, Equifax and TransUnion. You can either get the information from all three agencies at the same time or get one report at each quarter. However, it's important to remember that the information held by each agency is totally separate and unique. Check your credit report for erroneous information
You need to scrutinise the information held by each credit reference agency and get any mistakes corrected before applying for credit. Remember to include the right supporting information to prove that the data is held in error. Once received, each respective agency is required to act upon your request within 30 days.
How to improve your credit rating
Pay your debts on time
The quickest and easiest way to fix credit is by paying your debts punctually each month. Adverse credit is recorded by credit reference agencies for seven years. The longer it's been since you last defaulted, the higher your credit score will be. Avoid multiple credit applications
Don't employ a scattergun approach to applying for credit. Each credit search is recorded by credit reference agencies for two years, and this information can be seen by your creditors. Only apply for credit when you meet the eligibility criteria. Credit-building credit cards
A poor credit score can be overcome if you make a series of timely repayments ton your debt. If you don't have a source of revolving credit, consider
signing-up for a secured card. Use no more than 30% of your credit limit in one month. Reduce or clear credit card debt
If you owe too much money on credit, consider using your savings to reduce the amount that you owe your creditors. Credit utilisation as well as the amount that you owe relative to your credit limit, is a very important factor.