1. Get your free credit report and scores Before you start working on your credit, you will need to check your credit report. It’s also a good idea to find out your FICO score with all three credit bureaus. You can get your free credit report once a year on the Government website www.annualcreditreport.com. Free credit scores are available from Credit Sesame and Credit Karma. They even have great apps for android and iPhone, where you can check your credit scores anytime and get credit alerts anytime there is any activity on your credit file.
2. Identify the negative accounts Now that you have your credit report go through it and highlight accounts with a negative status. You will also need to highlight any late payments, collection accounts, or anything else that is and credit inquiries. Make sure your personal information is correct, including your address, employer, and phone number. Items to focus on Late payments Collection accounts Credit inquiries Inaccurate past or present address
3. Pay off your credit card debt Your credit utilization ratio is the amount of credit card debt you have compared to the credit limit. Keeping this ratio below 15% is essential. Your credit utilization ratio has a massive 30% impact on your FICO (Score model used by mortgage lenders) score. Only your payment history (30%) has a more significant impact on your overall credit rating. If you’re carrying high debt on your credit cards, then your credit rating is suffering, majority. Pay your credit card balances down to zero, or as close to zero as you can the have your credit utilization rate as low as possible to maximize your FICO score.
Secured credit cards If you don’t have a credit card, you will need to get one or two to help improve your credit score. Getting a credit card when you have bad credit is very difficult if you don’t know where to look. 6 Best Secured Credit Cards to Rebuild Your Credit A secured credit card works similarly to an unsecured credit card. The only difference is that with a secured card, you will need to pay a deposit equal to your credit limit. As an example: If you get a secured credit card with a $500 credit limit, you will be required to pay a refundable $500 deposit to secure the loan. After 6-12 months of on-time payments, the credit card issuer may convert your account to an unsecured card and refund your deposit.
4. Contact the collection agencies If you have collection bills with small balances or balances, you don’t mind paying you should call the collection agency. Tell them you wish to do a pay for delete. A pay-for-delete is just what it sounds like, you pay the amount owed, and they remove the negative account from your credit report entirely. Make sure you write down the person’s name and extension you spoke with. You also need “pay for delete” letters in writing from the collection agency, showing they agree to remove the account from your report entirely if you pay the agreed-upon amount. In some cases, you can settle the account for less than you owe, but many will want you to pay in full if they are deleting it from your credit history.