5 Steps to Fix Your Bad Credit Score

There are more than 30 million people in the United States with severe credit blemishes. Having a bad credit score can give you a hard time to find a profitable credit card with reasonable terms. Your choice of suitable plastics is restricted due to credit exceeding or defaults in the past. However, there is a light at the end of the tunnel. If you take necessary timely measures, you can repair the damage and prove your creditworthiness once again. We provide 5 simple steps to guide you through the process of fixing your credit score.

1. Order a copy of your credit report and check what information it contains. There should be no errors or inaccuracies. Your credit score is calculated based on the information in your credit report, so certain errors there can really cost you. Keep in mind that the data in a credit report from each bureau may vary due to the delays in reporting or updating information. That's why you need to order the copies of your report from all three credit bureaus to make a thorough analysis.

Errors in credit reports happen from time to time. For example, you can find that there are late payments that aren't yours or accounts listed as unpaid that were included in a bankruptcy. If you find inaccuracies or outdated information, ask the credit bureau to correct the errors. If you prove that you are right, they will change the incorrect information.

2. Pay down your credit cards that are close to their limits.

Credit bureaus take into consideration the ratio between the amount of credit you are using and your available credit limit. When you pay off even a part of your debt, you will get more available credit and change the ratio. You need to have balances below 30% of the credit limit to improve your credit score.

3. Check your credit limits. Typically, if creditors see a positive record of timely payments and no delinquencies, they gradually increase your credit limit. However, this information can be not reported to the credit bureaus. If your card issuer reports a lower limit than you have actually got, your credit score may go down. Fortunately, most creditors quickly update this information on your request.

4. Use your old credit cards. The older your credit history, the better for your score. If you don't use your old credit cards, there will be no payments to report. The accounts will still appear on your credit report, but they will have less influence than your active accounts. That's why it is recommended to use the oldest cards to charge a small amount of money from time to time and pay it off in full when you receive the billing statement.

5. Change your spending habits. Analyze what was the reason of your financial problems and improve your financial behavior. If you overspent, try to plan your purchases before you go shopping and never spend more money than you determined. If you did not have enough funds to make payments after job loss or other life-changing accident, build a decent savings pot. A well-considered financial management will let you prevent getting in trouble in future and help qualify for the best credit cards.