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7 Super Useful Tips to Clear Up Your Credit Score Trouble

It’s tough to live with bad credit, but you have the power to turn your credit around. By ensuring your credit report is error-free, taking on only as much credit as you can afford, and making all your monthly payments on time, you can raise your credit rating. Keep reading to learn more about how you can clear up your credit score trouble.

Take Care of Bad Debts

Your payments have a big impact on your credit score [1]. That’s why taking care of bad debts is important for raising your credit score. If you have outstanding debts, contact your creditors to find out whether you can settle the outstanding balance. This will allow you to take care of your balance for a fraction of the total cost. Whether you pay in full or settle your account, getting a zero balance is best for your credit score.

Know How Your Credit Score is Calculated

Once you understand how your credit score is calculated [2], it’s much easier to take the steps necessary to raise a bad credit score. The actual credit score formula is a secret, but we do know the five basic factors that are used to calculate it: payment history, amount of debt, age of credit history, types of accounts, and recent credit applications.

Ditch Cosigners

At one point, you may have needed a cosigner to help you get approved for an account. Without a cosigner you may have not have been approved at all. Cosigning can be risky since their actions with the account will affect you, too. Now that you’ve improved your credit, contact the creditor to find out how you can remove the cosigner from your account.

Contact Your Creditors If You’re Having Trouble

You can’t afford to miss payments when you’re working on repairing your credit. And it’s not just because of the late fees. You don’t want to deal with the damage that comes from late payments, especially when you’ve worked so hard to improve your credit. If you’re having trouble making your payments [3], contact your creditor to work out a payment arrangement or hardship program.

Beware Debt Collectors Who Don’t Follow the Law

Debt collectors are required to let you know they’re collecting a debt anytime they contact you. If a debt collector doesn’t give you this disclosure, they’re breaking the Fair Credit Reporting Act. There’s a chance the collector is a scammer trying to get you to pay for debts you don’t actually owe. Knowing your rights with debt collectors can help you protect yourself.

Seek Credit Counseling

Sometimes you have to call in a professional, even if it’s just for an outside perspective. Contact a consumer credit counselor who can help you work out a debt repayment plan with your creditors. The plan will reduce or eliminate your interest and allow you to pay off your debts at a lower cost.

Avoid Applying for New Credit

Part of your credit score takes into account the number of applications you make. While you’re working to repair your credit, it’s best to avoid applying for credit cards and loans because they’ll affect your credit score.

A bad credit score can stand in the way of you having applications approved. Following the steps in this article can help you recover from your past financial mistakes and raise your credit score.