A lot of people turn to credit repair companies if they have poor credit in the hopes of improving their score. While this works, it is actually a waste of your money. This is because you can repair your credit by yourself. You do, however, have to committed to making a change or you will only land yourself in further debt.
Step 1 – Get Your Credit Report
First of all, you have to get your credit report from the three main credit bureaus, Experian, Equifax and TransUnion. You must scrutinize the information on this report to see whether there are any errors. If there are errors, contact the issuing creditor and the credit bureau to inform them of this. A little trick that may or may not work is to also contest each of the debt items that are listed. If you do this properly (meaning you also inform the credit bureau) and the creditor does not reply within the allocated time, the debt will be removed from your file. As a result, your credit score will improve.
Step 2 – Repair Your Credit
Now that you know what your score is, you need to start to take proactive steps to improve it. There are a few things that work very well:
- Budget yourself so you can make higher repayments. Any additional money you can spend should go on the debts with the highest interest rates, as they will then reduce quicker.
- Continue to make all your payments on time.
- Consider a consolidation loan so that you can bring the total outstanding balance down by lowering your overall interest rate.
Step 3 – Apply for Bad Credit Loans
It may sound counterproductive to get more credit to improve your credit, but it does work. However, this is where you need to be totally committed to actually improving your situation. There are various short term loan constructions out there that are all for very short periods of time, which you can use to improve your credit. For instance, when you look for a payday loans direct lender online, you will find loans in very small amounts that will run only for a few weeks. Applying for these loans is very easy and you should be accepted so long as you have a regular income. Go for the smallest amount possible, and pay it back in full on the repayment date. While this does set you back to a degree, because you will have to pay the interest, the effect on your credit report will be tremendous. Showing others that you are credit worthy and that you pay back your loans is all that other credits look for.
You may have to apply for different payday loans for a few months in a row, after which you may be able to ‘graduate’ to slightly longer lasting installment loans. If you continue to make all your payments in full and on time, your credit rating will improve very quickly.