Sometimes life happens. Perhaps you’ve had to deal with being laid off by your employer due to downsizing. Perhaps you’re trying to manage the loss of a loved one. Perhaps you’ve had unexpected medical expenses or auto repair expenses or home repair expenses.
There are a million reasons why you may find yourself with a poor credit score. Instead of beating yourself up, the best thing to do is take action to try to repair your credit. Here are a few things you can do if you need to fix your credit in three months.
Know What’s On Your Credit Report
The first thing you need to do is take a look at your credit report so you can know what is on there. Many Americans have inaccuracies on their credit reports and they don’t even know it. You can use websites like Credit Sesame to obtain a free credit report to get started.
The next thing you need to do is take the necessary steps to remove any negative information that is inaccurate or older than seven years. While most of the time, these items will fall off over seven years, sometimes that’s not the case.
#1. Make Payments On Time And Contact Creditors
Pay every bill you have on time. It’s good if you can make multiple payments in a month. If you have large sums of debt you owe to collection agencies, don’t ignore them every time they call.
Instead explain your situation to your creditors. They may be willing to work with you, make payment arrangements, and even take less than is owed to them. They will be a lot more reasonable if you actually contact them and let them know what’s going on.
#2. Open New Lines Of Credit
If your credit is very bad, you may need to get a secured credit card to begin with. This is where you pay a deposit of usually $300 or more, and you are given a credit card with a credit limit of that amount. Doing this allows you to build up your credit without the worry of getting yourself into debt.
If you can get more of a mix of credit on your credit report, this is also a good thing to do. This means having various types of credit accounts. For example, have a credit card, an auto loan and a student loan. Note that you shouldn’t do these things just to improve your credit. Take out the loans when you need them and make sure you follow the first tip of paying on time.
#3. Keep Your Utilization Under 30%
Keep all of your credit card utilization under 30%. This may mean having a balance spread out over two or three credit cards as opposed to maxing out one credit card. This may also mean paying off a credit card multiple times in a month. You can set up balance alerts so that anytime you are getting close to that 30% mark, you can make a payment to keep the utilization down low.
The reason for this is creditors use this as a gauge for how credit-worthy you are. As long as you aren’t racking up debt and maxing out credit cards, they see you as a good risk and this boosts your credit score. If on the other hand you are getting into debt and are near the limits on your credit cards, they may think you are in over your head and this will hurt your credit score.
If you are diligent about it, you can repair your credit significantly in just three months. The important thing to remember is not to give up on having a better credit score. Plenty of people have damaged their credit at one point or another and been able to bounce back. You can do it too.
All you have to do is follow the steps outlined above.