When you miss your payments repeatedly, your credit score could go from good to bad. A bad credit report is a direct reflection of how you manage your credit. In rare cases, a bad credit report may just be a case of negligence, when you refuse to go through your credit report.
Many credit reports include an explanation of the things that are negatively affecting your credit. This will give you an idea of what you need to fix to improve your credit. Sometimes, there could be errors that you may not see if you don’t go through your credit reports regularly. These errors are fixable and should not be allowed to remain on your report for long. You can write a dispute letter along with any proof you have to the bureaus to fix errors on your report.
How To Fix A Bad Credit Report
01 Past Due Accounts | How To Fix A Bad Credit Report
Your payment history has the largest impact on your credit score; 35 percent to be precise. Bring all your past accounts to the current. If you have accounts that are 30 or 60 days late, make those payments to keep them from taking a toll on your credit. Once accounts are more than 90 days late, they’re considered to be extremely delinquent and could go to collections.
Negotiate with creditors and debt collectors to remove charge-offs and collection accounts from your credit report. They don’t have to remove this information, but you may be able to negotiate with them by paying for deletion. If the account is already paid, a goodwill letter is likely your best bet.
02 High and Over-The-Limit Balances | How To Fix A Bad Credit Report
Your level of debt has the second-largest impact on your credit score – 30 percent of your FICO score. Ideally, your credit card balances should be at or below 30 percent of your credit limit.
First, focus on bringing over-the-limit balances below your credit limit. Then, work on bringing all your credit card balances down to a more reasonable level.
03 Unpaid Judgments | How To Fix A Bad Credit Report
Pay any outstanding judgments. They’ll keep hurting your credit either until you’ve paid it or until it falls off after seven years or after the statute of limitations, whichever comes first.
04 Student Loan Default
Student loan default isn’t always permanent. Talk with your lender to find out what your student loan repayment options are to bring them out of default. Often, you will have to take several months of timely payments before your student loan will be considered current. In certain situations, you may want to consider a student loan forgiveness program.
05 Bankruptcy, Foreclosure, Paid Tax Liens, Paid Judgments
With these types of entries on your credit report, there isn’t anything to repair, unless the entry is inaccurate. In that case, you would use the dispute process to have the item removed from your credit report. You might have to work with the courts and banks to have their records updated.
If bankruptcy or another serious delinquency is listed on your credit report, focus on rebuilding your credit by adding positive payment history and demonstrating you can manage your credit. If you can’t get approved for a regular credit card, apply for a secured credit card. Use the card to make small purchases and pay your bill in full every month.