Celebrating fixing your credit score in the sunset. Relax knowing your bad credit has now become better with a beer.

As you likely know, you will impact your credit score whenever or however you use credit cards. To make things slightly more complicated, how you manage your income and your bills will also impact your credit score.

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Credit comes in a variety of fashions that do not involve credit cards and your credit score will fluctuate depending on how you pay certain bills. For instance, your utility company advances you credit in the form of services. These are in the form of electricity or water you use which you then pay for at the month-end. There are also certain types of inquiries that will impact your score. These can range from simply applying for a credit card, automotive loans, to applying for a mortgage. These types of credit pulls will hit your credit even if you do not even get approved. Your credit score will fluctuate due to the initial inquiry.

Understandably, due to all the factors involved, it is not difficult to end up with a lower-than-ideal credit score. That said, it is also a relatively straightforward matter to gradually improve your score. The process is not immediate, but it is effective in that your score will improve. This can also help your understanding and usage of credit.

Showing people reaching the light at the end of the tunnel of bad credit. Celebrate the end of bad credit.
  • 1. Get current on your bills – The best thing you can do to help improve your credit score is to bring all your past-due payments current. In terms of big-ticket items, this means catching up on your mortgage, car payment, or utility bills. However, your credit cards should be current as should any store-issued cards. Any time you are late, a creditor will report the tardy payment to credit-rating companies. Similarly, when you are caught up, this information is forwarded as well.
  • 2. Credit reports – If you have a lot of past-due bills, it might be difficult to track them down or remember who requires what. An easy fix is to request a copy of your credit report. A copy of your credit report will include a list of all your creditors, the outstanding balance, and the contact information. More importantly is that a credit report allows you to check for inaccuracies, which might be tanking your score. If this is the case, you can investigate potential identity thefts. By law, credit-rating companies must fix your credit report. If you are the victim of identity theft, you must be as diligent as possible to prove you have not taken out loans listed on your report.
  • 3. Consolidate – Loans for consolidation are a common and effective way to improve your credit score. They remove the burden of paying multiple bills, which can be a hassle to manage. Additionally, if you are paying money toward multiple bills each month, consolidation loans can help by allowing you to pay one bill with a low annual percentage rate. This enables you to pay less each month. Simply put, you will welcome anything that will help make payments easier while also reducing the total monthly payment amount.
  • 4. Thirty-day rule – As your credit score starts to improve, the 30-day rule will help you keep it under control. This rule advises that you should buy no more on credit than you can pay off each month. Because this rule teaches strategy, it is an effective fix for people wanting help improving their credit score.
  • 5. Prioritize your bad debt – In terms of improving your credit, there is seldom one fix. That said, one of the best ways to fix your credit is to start paying the smallest debts. Doing so will reduce the number of past-due items on your report. Additionally, once these items are paid, you will have more money at the end of the month for other bills. Soon, all that will be left are more expensive bills like your car and mortgage. These will be much easier to address as a result of taking care of so many smaller bills first.
  • 6. Negotiate – One of the best ways to fix your credit is to contact a creditor. Tou can find out if 50 percent of the balance will clear the account. Many creditors will be able to settle an account for much less than the original balance owed. If this is the case, you should take the opportunity. It is important to remember that you must get the agreement in writing. If you do not, whatever money you pay may or may not be accepted as part of a payment arrangement. In addition to negotiating for a lower monthly installment, you can often negotiate a lower monthly payment. Doing so will likely lead to more of your money going toward interest, but the negotiated amount will be much less than your current obligation. As such, it might take you longer to pay off your bills, but such a payment plan will be less stressful and more realistic.
  • 7. Dispute – Although you cannot very easily dispute loans, you can dispute items on your credit report. Additionally, you can dispute information on your credit report that does not reflect the accuracy or amounts of your payments. In these instances, you must take the initiative to fix faulty information on your report because creditors will not do it for you. To dispute faulty information, you need only write the creditor and provide copies of check payments that you have made. Once they have the information, your report will be updated within 30 to 45 days.
  • 8. High-rate cards – It is important to understand that high-rate cards or cards that come with a monthly fee must be taken care of first. If you do not address these cards first, most of your money will go toward fees and interest rather than to the principal. In this instance, shopping reputable brokers for consolidation loans as a fix is a good strategy as the fees and interest will often be much lower.
  • 9. One-third of your income – Fixing your credit also involves adhering to better debt-limit rules. For instance, if you are considering one of the many consolidation loans out there, you should attempt to keep the number of your loans to no more than 10 percent of your monthly net income. That said, doing so is sometimes not possible because such an amount might not consolidate all our debt. In such a case, it is important that whatever assistance you receive does not exceed 40 percent of your income because too much debt will not help you fix your problem. Bankers and mortgage companies know this very well. For instance, mortgage brokers usually cap loans at 30 percent to 35 percent of an applicant’s income as this leaves enough income to pay the mortgage and stay on top of other monthly expenses. If your loans or other debt burdens exceed 40 percent of your income, you will be in danger of sliding back into debt that is difficult to manage.