OakTree Law provides various services for people with high amounts of debt. But do you know how to fix your credit without declaring bankruptcy or taking other extreme measures?
No professional skill is needed to begin credit repair. First, obtain a credit report directly from a credit bureau, such as Experian, Equifax, or TransUnion, for a fee. You can even get your credit report for free from www.annualcreditreport.com. Next, review each report thoroughly for errors; using the information listed, you can identify the following common mistakes:
- Incorrect details such as stray accounts and on-time payments reported late.
- Past due payments or accounts that have been sent to collections agencies.
- Accounts that that have exceeded your credit limit (maxed out).
If you do find inaccuracies, follow the instructions received with the credit report for disputing information. For credit reports ordered online, you can usually file a dispute over the Internet, with options to do so via mail or phone.
Checking your FICO credit score is even easier. Most credit cards allow you to do so; good credit is between 700 and 740, while credit scores range from 300 to 850.
Fixing Bad Credit
Once you know where you stand, you can take action. Bad credit can be improved by:
- Paying all your bills on time
- Paying down your debt and revolving balances
- Setting up payment reminders on credit card sites
- Getting current with missed payments
- Consult a credit counselor for help managing your credit
Past due accounts can have a big impact, since your payment history is 35% of your credit score. If your payment is 180 days past due, a charge-off occurs, which is one of the worst account statuses. Your best option is to pay a charge-off in full, or else it may be sent to a collections account.
Watch Your Credit Utilization
Credit utilization is 30% of your credit score. High balances can lower your score, especially if your credit cards are maxed out. Start paying down your balances. The best scenario is to use no more than 30% of the limit, while below 10% is the ideal scenario. Loan balances work in a similar way.
Also, resist the temptation to apply for new credit. When you apply for a card, it is a “hard inquiry” on your credit report. The impact of such an inquiry is greater if you have below-average credit.
Having credit cards and using them responsibly will help rebuild your credit score. You’ll be a lower risk than someone who has no credit cards. If you do apply for new credit cards or open new accounts, only do so as needed. And don’t try closing accounts; they’ll still be on your credit report.
It can take time to improve your credit score. Sometimes, it may drop unexpectedly. Continue to manage your credit responsibly and your bad credit will improve over time. If you have past credit problems, continue to re-establish your credit history. Pay your balances on time and be responsible in opening new accounts.
Contact OakTree Law
If your credit is bad, bankruptcy may seem inevitable. The longer you wait the worse your situation might become, so filing for bankruptcy sooner might help you get back on track. Our Los Angeles debt attorney can consult you with professional advice and assistance. If bankruptcy is the only option, our Orange County bankruptcy attorney will discuss the best options and help you through the process. For more information, call 562-219-2979 or request a free evaluation today!