Do you have bad credit rating? If you have problems getting approval for credit card applications or personal loans, you may have bad credit.
To check your credit score, you have to get your credit reports from the three major credit bureaus. They are Experian, Trans Union and Equifax. A faster way is to order a 3-in-1 report that contain you credit score as well.
If your credit score is 620 or less, in means your credit rating is bad. There are many factors that can contribute to a low credit score. However, we want to focus on increasing your credit score to a more acceptable level.
The first step is to review what is inside your credit reports. Look out for negative records such as late payment, accounts shown as open that were long closed, debts that were acquired by another person and any other unusual records. Contact the credit bureaus to remove as many negative items as possible. Also check other minor details such as incorrect name, age and address. Get them corrected as soon as you can.
The second step is to add positive records to your credit reports. When you review the three reports, you will likely find that they do not tally exactly. There will be positive records in one report which are missing in another. Contact each bureau and ask them to add the positive records to your credit report.
The third step is to take a closer look at your payment history. How often are you late on payment? You need to set yourself a budget each and every month for bill payment. These include utility bills, cell-phone bills, mortgage payment, credit card balance and so forth.
If you have large credit card debt that make it difficult for you to pay even the minimum amount, you need to call your creditors and ask for a reduction in interest rate or even an short term interest freeze. Let them know your problem and your proposed solution. They may not grant your request immediately but keep up your efforts. Druing this negotiation phase, you should try to keep your repayment steady and consistent. As long as you keep your repayment on good standing, they may grant your request.
Your payment history plays an important role in the credit score calculation. So this is an important step. Try your best not to default on any bills.
The fourth step is to stop spending on your existing credit cards and come with a plan to eliminate your debt. If you do not know how to do this, visit your local library and read up on books related to debt elimination.
The fifth step is to sign up for a secured credit card. This type of card works like a standard credit card but it requires you to have a cash deposit or saving account with the card issuer. The amount deposited in the account will be the collateral as well as the credit limit. This limits your exposure to more debt but still provide you the convenience of credit card purchase. More importantly, your usage of the card is reported back to the three bureaus. This means that you have a good chance to rebuild your credit history.
Restoring your credit rating will take some times. It can't happen overnight. Stick with the five steps above and you should see some credit score improvement very soon.