Fixing bad credit history is crucial for buying a car or a house. Paying bills on time, keeping 70% of a credit card open, and checking for incorrect documentation are steps to repair credit history. Bankruptcy, tax liens, foreclosures, and collections can’t be removed, but responsible credit card handling can reverse bad credit history.
A bad credit history can haunt anyone looking to buy a car or a house, and getting your credit history right is crucial for many people who have had a difficult financial past. Even if it takes time, a bad credit history can be fixed. Some of the obvious steps to repairing your credit history are paying your bills on time, keeping at least 70% of a credit card open, and paying any outstanding fees. Another factor that affects your credit history is incorrect documentation, such as credit history saying a bill wasn’t paid when it really was, so it’s important to sort and check your credit history. While bankruptcy and tax liens can ruin a credit history and can’t be removed directly from your credit report, it is still possible to repair your credit history.
Responsible credit card handling is the first step in repairing a bad credit history. This means that all bills must be paid on time. If there are fees that cannot be paid on time or are currently in default, they must be paid as soon as possible. All credit cards should also have about 70 percent of their credit line open, meaning a $1,000 US dollar (USD) credit card should have $700 USD open for use. If you must use your credit card and need more than 30 percent of your total credit, pay the amount quickly to free up that 70 percent as soon as possible.
Credit reports are usually correct, but a single mistake can make an adverse credit history seem even worse. Common mistakes can include mentions of defaulting on loans, defaulting on payments, or exceeding a credit limit, even though you paid the proper amounts on time and didn’t go over your credit limit. It helps to order a credit history report, review any negative items, and then cross-reference them. If there are incorrect items, you need to call your credit card company and let someone know. Even if all of the negative rumors are correct, you can reference your spending habits and find out exactly what is holding back your credit score.
Bankruptcies, tax liens, foreclosures and collections are devastating, even for those with excellent credit, especially since these elements won’t be removed from your credit history for years. While these items can’t be erased, showing you’re responsible for your credit will help reverse a bad credit history. If you can’t get a regular credit card, get a secured credit card or one that requires collateral. Responsibly handling a regular or secured credit card will show the credit bureaus that you are working to fix your bad credit and they will start to increase your credit score.
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