How to Bounce Back After a Credit Hit

Checking your credit report and score regularly is an essential task. When you apply for a loan or mortgage, your credit score guides lenders into deciding whether or not to approve you for a loan, and how high your interest rates might be.

When you apply for some jobs, they may even look into your credit score.

Unfortunately, keeping your credit score up isn’t always easy. If you’ve ever lost a job, been unable to pay your bills or debt, or had a financial emergency come up, your credit score may have taken a hit.

Luckily, there are ways you can improve your credit score. It’s important to note that raising your credit score is a process. It won’t happen overnight. But with some wise financial habits, it is possible to repair your credit score.

Here is how to fix your credit score after it takes a hit.

Check Your Credit Report

• Before you can start fixing your credit score, you need to assess the damage. You can do that by studying your credit report. 

Dispute any Errors on your Credit Report

• After reviewing your credit report, you may find suspicious activity, such as accounts you did not open or apply for. It’s vital to check your credit report regularly to catch any errors. If you find any oddities on your credit report, write to the credit reporting agency to tell them what you believe the error to be. Next, write to whoever provided that information to the credit reporting agency to tell them that you are disputing an item that is listed on your credit report.
  Successfully disputing errors on your credit report can save your credit score.

Make Payments

• Payment history makes up 35% of your credit score. Since it makes up such a high percentage, any missed or late payment can drastically affect your credit score. Fortunately, your credit score can be affected positively when you make on-time payments.
  Getting caught up to date on overdue payments and making sure you are able to pay your bills in the future will help to raise your credit score gradually.

 Keep Your Credit Use Low

• Though on-time payments constitutes a majority of your credit score, you can also improve your credit score by keeping a low credit utilization rate.
  Credit utilization is the amount of credit available to you. In an ideal situation, you would never use more than 10% of credit available to you. If you have outstanding debts, that may be impossible to achieve in the short-term, but you can focus on how you use your credit cards.
  Ideally, you would pay off credit cards in full every month. But if you can’t, it’s best to pay off the credit card with the highest balance first to lower your credit utilization rate.

Read the full article at: Rachel, The Latte Budget

February 26 2018 By Rachel, The Latte Budget