Credit repair is the process of restoring a personal credit score after it has deteriorated due to a variety of factors. Credit repair is not very hard. It may be as uncomplicated as disputing inaccurate information with the credit bureaus to improve your credit score.
About FICO Credit Scores
Your FICO credit score is a number that a lender uses to determine how responsible you are when borrowing money. For example, credit scores above 700 indicate that you pay your bills on time and don't borrow more money than you can repay. Once you have your credit score, you can evaluate whether or not you need to establish a credit repair strategy. The following credit score range shows FICO® scores that are divided into five levels:
- Exceptional: 800 – 850
- Very Good: 740 – 799
- Good: 670-739
- Fair: 580 – 699
- Poor: 300 – 579
A significant change in your credit score usually takes at least 3-6 months of good credit conduct, and it's impossible to make a change any faster. Here are statistics based on which we suggest wiser solutions to your credit repair:
1. About 20% of clients who detected errors saw a rise in their credit score.
Suppose you're like most people and don't know your credit score; there are three free resources available:-Trans Union, Equifax, and Experian. Each of the three credit bureaus is permitted to provide you with one free credit report per year, and requesting one doesn't have a negative impact on your credit score. In addition, these sources will provide your FICO score, which is used by 90% of loan companies. Examine each report thoroughly. Any inaccuracies you identify should be addressed. Notifying the credit reporting bureau of inaccurate or outdated information will boost your credit score as soon as the erroneous data is deleted.
2. According to a new survey from Aite Group, 23% of Americans pay their bills within the first 30 days after the due date, 18% pay beyond 30 days, and 5% never pay on time.
Because your payment history is an essential component in establishing your credit score, late payments are among the worst entries that might appear on your credit report. 15% of Americans who have missed payments have contacted their creditors to request a postponement or other payment arrangement. To avoid this issue, list down each bill's payment deadlines in a planner or notebook and set up online reminders. Paying your bills on time on a regular basis can improve your credit score in a matter of months. Moreover, pay your bills every two weeks rather than once a month if you can afford it. This improves your credit score by lowering your credit utilization.
3. FICO recommends a utilization rate of less than 30%, but the lower, the better.
When you're trying to manage your debt wisely, it can be challenging to determine which payback approach is best—paying off the debt with the highest balance or paying off the debt with the APR-especially if you have many accounts with different amounts and interest rates. If you have many credit cards and the balance on one or more of them is near the credit limit, pay off the one with the highest balance in order to reduce your credit utilization rate.
4. Over one-fourth of Americans (28%) have at least one debt in collections.
Late payments or charge-offs have less impact as debts get older, but this doesn't always mean your credit score will improve. If your creditor agrees to list your account as "Paid in Full" or "Paid as Agreed," paying off previous debt can help, but the effect is usually minor. Getting rid of previous debts may not improve your credit score dramatically, but it will show the bank that you're serious about meeting your financial commitments.
5. In the United States, the credit card market has a significant impact on daily life. The average American has several credit cards, each with a balance of thousands of dollars.
Each time you ask for credit, it is recorded as a "hard inquiry" on your credit report, and if you have too many in two years, your credit score will suffer. In general, a customer with strong credit can apply for credit a few times per year before their credit score is affected. However, if you already have poor credit, these queries may negatively influence your score. Thus, it is highly recommended not to apply for new credit cards if you want to repair your credit.
The article shows that you can do certain things to enhance your credit score if it isn't where you want it to be. Thus, lower interest rates on loans and the capacity to achieve more considerable credit card limits can be obtained by applying the tactics mentioned above.