Fixing Bad Credit With Credit Cards
Whether your bad credit is the result of missteps like late payments or more serious financial blunders such as bankruptcy, it takes time to fix. You'll need to start by removing negative information from your credit reports and adding positive data to them, which can be done for free with credit cards (we'll explain how in a bit). Then you can begin to build good credit again.
If you're dealing with big errors on your credit report, resolving them can help raise your score quickly. These include items that don't belong to you, incorrect information such as a paid-in-full debt listed as still open or a missed payment listed as late, and inaccurate account balances. If you find these on your credit report, you can dispute them with the credit bureau by following the instructions on the report. You can use a credit reporting agency's online, phone or mail system to file a dispute.
Another key step is to limit the number of new credit cards you apply for. Several applications in a short period of time can lead to repeated hard inquiries on your credit report, which can lower your score. So when you're ready to reestablish credit, choose one or two cards and apply for them in small amounts over time.
Then, focus on making your payments on time and bringing down credit utilization rates. Most experts recommend that you keep your credit card utilization under 30% of the total available amount on each of your cards. A high percentage of usage can lower your score, even if the credit card balances are paid off in full.
You can also use a credit counseling agency to get to the root causes of your debt problems, which can help you understand what's driving your spending habits and how you can change them to improve your finances. A counselor can also work with creditors on your behalf to try to negotiate a more favorable repayment plan or lower your interest rates, which may be necessary if you're trying to manage an unmanageable credit load.
Depending on the size of your bad credit and how much you're trying to rebuild, it can take months or even years before your credit scores reach fair or excellent status again. Some credit missteps, such as delinquencies and certain types of bankruptcies, stick around for seven years or longer.
It's also important to recognize that it's illegal for anyone to charge you to remove accurate information from your credit report. If a credit repair company makes that claim, you should be suspicious. A reputable credit repair service will check your credit report for errors and then contact the credit bureaus and creditors on your behalf to challenge inaccurate information for you. A few credit repair services might also charge a setup or initial fee to collect your personal and financial information and create a strategy plan for your specific situation. But those who promise to make your credit 100% perfect for a fee are most likely scammers.fixing bad credit