Dealing with poor or damaged FICO credit scores can seem like fighting an unending battle. Perhaps you have been sliding to the bottom of the mountain for years due to financial mistakes or hardships. Perhaps you have just now discovered that there is a mountain in your path due to identity theft or reporting errors. In either case, the good news is that all credit battles can be resolved with proper tools and we are here to help supply you with those.
The first step to repairing your damaged credit is to pinpoint exactly why and how your credit is damaged. To do this, you should obtain a copy of your credit report by visiting AnnualCreditReport.com.
This website is authorized by the federal government to provide you with a report for free once a year under the Fair Credit Report Act. Familiarize yourself with each account and ensure that all of the information on your report is accurate and if you find any errors be sure to dispute that information directly with the bureaus (instructions are provided on the report on how to do so).
The next step is to ensure that you are making all of the required minimum monthly payments for each account. On-time payment history is the biggest factor in most credit scoring models and your scores will continue to improve as time goes on without missed payments.
Once you are making the minimum monthly payments on all of your accounts you should then look to begin to systematically pay down debt starting with revolving accounts. The main type of revolving debt individuals carry is credit cards. Reducing the balance on your credit cards or other revolving accounts (generally loans with no fixed monthly payments) will lower your credit utilization which is the second biggest factor in most scoring models.
Another easy way to improve your credit scores is to avoid any new credit inquiries. This requires you to not open any new accounts (credit cards, auto loans, personal loans, etc.) for the foreseeable future. Most inquiries stay on your credit report for around 12-24 months depending on the type of inquiry from the creditor. Having some inquiries is expected but having too many can negatively impact scores.
Additionally, you should also look to avoid closing any accounts even if they currently have no outstanding balance. While it might sound counterintuitive, closing accounts could affect your credit profile and negatively impact your scores.
In conclusion, it is important to not let your current credit situation overwhelm you. While it might take time and effort it is entirely possible to boost your credit scores and overall credit profile by taking the steps listed above and following this advice. If you need more individual help in determining how you can fix your credit to purchase a home give us a call at (760) 930-0569.