How to clean up credit.
Why having bad credit hurts you.
A bad credit score is not simply a series of numbers that banks use to determine whether or not you qualify for a loan. A bad credit score can influence not only a home or automobile loan, but also insurance rates and even your employment. If you have a bad credit score, you simply must learn how to fix the credit score in order to qualify for a number of things.
First of all, a bad credit score will land you a much higher interest rate on your home mortgage as well as an automobile loan. That is if you qualify for a loan at all. Depending on what your credit score actually is, many lenders will not even qualify you for lending. Keep in mind that the rule of thumb is the lower your credit score, the higher interest rate you will pay. It takes time and some effort on your part to repair your bad credit score but it could potentially save you hundreds of thousands of dollars throughout your lifetime.
In order to fully understand the importance of your credit score, it may be important for you to understand how the numbers work. The median FICO score in the United States is currently around the 700 mark. Those who fall below that mark will see higher interest rates and a much harder time obtaining credit. The median score simply means that half the people in the United States have a score higher than the 700 mark, while half the people have a lower score.
Take heart. Even if you do have a low credit score, there are ways in which you can repair your credit. It is important to note that errors on a credit score are a common occurrence. According to financial experts, the most common mistake on one’s credit report is an account listed on that record that actually belongs to someone else. This is particularly problematic for those who have a common name. It is a good idea to routinely check your credit report, at least once every year to ensure that there are no mistakes listed.
If you do find a mistake, it is important that you know how to implement a bad credit fix. You can file an online dispute or you can file a dispute by phone or certified letter. Be sure to include your name, address, birth date and your social security number. You should also include the company’s name with which you have a dispute and the account number as well as the reason for your dispute and list any corrections to your personal information that need to be made.
Be certain to gather any needed documentation that will back up your claim. If the dispute is valid then the credit bureau must delete this information. If the information on your credit report is accurate, then it will stick with you for up to seven years. The absolute best way to clean up your credit is to keep your payments current and be sure to never borrow more than you can pay back.
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