There are many perks you can enjoy when you have an excellent credit score, like qualifying for fair deals on mortgages, mortgage refinance, auto loans, and personal loans. The best thing about it, too, is that you tend to have a low-interest rate on most of your loans and better repayment terms. But if you’re one of those people with a lower credit score, things might be a little hard for you, especially when qualifying for loans.
If you’re looking to take out a conventional loan, you might find it challenging. That said, the first thing you should do is to fix your credit score. The second thing is to look for any inconsistencies and mistakes in your credit history. The American credit system is vulnerable to flaws, and erroneous credit records tend to make people’s creditworthiness riskier in a lender’s eyes.
Fortunately, there are ways to fix your credit score.
Inspect Your Credit Report
When trying to fix your credit score, inspecting your credit history should be the first thing on your to-do list. Any mistakes, inconsistencies, and fraudulent activities could break your chances of loan approval. To see your credit history and determine the mistakes and inconsistencies, you need to request your credit history from Annual Credit Report Services through an online request, calling -877-322-8228, or by mailing them at their P.O Box.
You’ll see any financial activities you have made recently, like loans, credit cards, and your bank accounts on your credit report. Moreover, the government states that U.S. citizens should at least get one free credit report a year from three major credit bureaus. You could also buy a copy directly from their offices.
Dispute Negative Marks
Back in the day, you have to mail credit bureaus to dispute any negative marks or discrepancies in your credit report. Now, you can do them online, which is convenient. Of course, you need to have some supporting evidence or anything to support your dispute, or it will just be denied.
Once you have a copy of your credit report, you can check all of your information for any errors. Of course, harsh as it sounds, your credit score being bad is entirely your fault, but errors can contribute to that. While these errors are not all that common, they do happen. Even minor mistakes like misspellings and such should be disputed.
Next, check your purchases, credit card usage, loans, and outstanding debts and try to look for any errors. Make a copy of your credit report and highlight them for easy reference. Of course, you’re going to need some significant evidence to back up your claim. This is important because if you don’t have any proof, the credit bureaus will deny the claim.
Finally, make a letter regarding your claim, accompanied by your evidence, and send them online through any credit reporting agencies. The credit bureaus would then have 30 days to respond.
Pay Your Outstanding Debts
After you send an email of your disputes regarding your credit report, now it’s time to pay up your delinquent accounts and outstanding debts. Take note that a payment is late only after 30 days of the due. Don’t celebrate just yet, though, since your lenders can report your account to credit bureaus, which will result in your credit score getting affected.
Remember that the longer your payment is due, the more significant impact it will have on your credit score. Also, late payments can last for seven years. That said, it’s best to pay them as soon as you can if you want to save your credit score.
Of course, paying all of your outstanding debts as a short-term move is hard, especially if you have significant outstanding debts. However, this doesn’t mean that you shouldn’t pay them. Pay them little by little like one of your long-term plans. Not only will it improve your credit score over time, but it will also reduce the payment of your interests.
Pay Your Most Recent Accounts First
One of the factors that affect your credit score is the age of credit. The older the account is, the more significant impact it will have on your credit score. For this reason, it’s best to pay off your recent accounts so they won’t further affect your credit score. Also, this way, you’ll be paying less interest along the way.
Your credit score is your gateway to a better financial life, provided that it’s an excellent one. However, if you have a low credit score, things might get a little challenging. Well, not little, but very challenging. It’s not yet too late, though, as you can still fix your credit score with the steps provided above. Good luck!