Repairing bad credit history requires paying bills on time, keeping credit card usage below 30%, and checking for incorrect documentation on credit reports. Bankruptcies and tax liens cannot be removed, but responsible credit management can improve credit scores.
Bad credit history can haunt anyone trying to buy a car or home, and fixing your credit history is paramount for many people who have had a difficult financial past. Although it takes time, a bad credit history can be repaired. Some of the obvious steps to repairing credit history are paying bills on time, keeping at least 70 percent of a credit card open, and paying late fees. Another factor that affects credit history is incorrect documentation, such as credit history that says a bill wasn’t paid when it actually was, so it’s important to order and check your credit history. Although bankruptcy and tax liens can ruin a credit history and cannot be removed directly from your credit report, it is still possible to repair your credit history.
Managing credit cards responsibly is the first step in repairing a bad credit history. This means that all invoices must be paid on time. If there are fees that cannot be paid on time, or are currently in arrears, they must be paid as soon as possible. All credit cards must also have approximately 70 percent of their credit line open, which means that a $1,000 USD (USD) credit card must have $700 USD open for use. If the credit card must be used and more than 30 percent of the total credit is needed, pay the amount quickly to release that 70 percent as soon as possible.
Credit reports are usually accurate, but a single mistake can make a bad credit history look even worse. Common mistakes can include mentioning loan defaults, late payments, or going over a credit limit, even if you paid the proper amounts on time and didn’t go over your credit limit. It helps to order a credit history report, review all the negative items, and then cross-reference them. If there are incorrect items, you should call the credit card company and tell someone. Even if all the negatives are correct, you can reference your spending habits and find out exactly what’s holding your credit score back.
Bankruptcies, tax liens, foreclosures, and collections are devastating, even for those with excellent credit, especially since these items won’t be removed from your credit history for years. While these items cannot be erased, showing that you are responsible for your credit will help reverse a bad credit history. If it’s impossible to get a regular credit card, get a secured credit card or one that requires collateral. Managing a regular or secured credit card responsibly will show the credit bureaus that you are working to repair your bad credit, and they will begin to raise your credit score.
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