The Top 5 Cardinal Rules of Credit Repair

Your credit score: those three-digit numbers have the capacity to make or break your personal financial position. If you think having a poor credit score doesn’t matter because you don’t intend to buy a house or apply for a credit card any time soon, think again. It matters, and it’s impacting your life.

Don’t let the numbers ruin your life. Take a look at the five cardinal rules of a do it yourself credit repair:

Rule # 1- Know Your Rights

According to the Fair and Accurate Credit Transactions Act of 2003, you have the right to monitor your credit report from each, or all, of the three major credit bureaus once in every 12 months, for free. Furthermore, should any errors arise, you may address these inaccuracies and dispute the errors with your credit reporting company, and they must issue a response within 30 days.

If you hire a credit repair company, make sure you get everything in writing, including the fee charged and the expected results.

Rule # 2- Know What To Expect

The role of credit repair companies is to help build your credit score. While they may help dispute errors on your behalf, they cannot deliberately eliminate accurate information from your report. The Federal Trade Commission is the governing body that oversees credit repair companies through the Credit Repair Organization Act. According to this, it is illegal for credit repair companies to lie about what they can do for you, or take advance payments before the completion of their services.

Rule # 3- The Credit Score 35:30:35 Ratio

So, what makes your credit score? What are those contributing factors that can directly raise or lower your credit score? Understanding that could provide us with the means to control it. It has been claimed by experts that a healthy and regular payment history accounts for 35 percent of your score. This is so crucial, that if you miss even a single deadline, your credit score could drop as much as 100 points! Therefore, in order to ensure that you avoid late payments and the impending credit doom that they bring, arrange for an automatic payment systems where your bank will issue regular payments on your behalf. That way, you don’t miss a payment!

The other 30 percent of your credit score accounts for the amount of debt you owe. It is recommended that consumers must maintain a 30-35 percent of credit utilization ratio on their limits. So, if you have a $1000 limit on your credit card, your debt should not exceed $350. Either pay off these smaller debts, or ask your lender to increase the credit limit. The final 35 percent is a combination of various elements and miscellaneous debts.

Rule # 4- Check Credit Reports At Least Once A Year

The FTC released its eight-year study on the accuracy of credit reports, in which one of the discoveries include that 25 percent of consumers identified errors on their credit reports. These errors had the capacity to affect their credit scores. With credit report inaccuracies so common, it is imperative that you keep track of your credit report at least once a year, so as to dispute any errors that might be hurting your credit score. The best part is that you can monitor your credit report for free.

Rule #5- Don’t Close Old Accounts

Having too many credit card accounts may seem like a hassle. However, before you close them, you might want to consider this: having these closed may actually ding your credit score because it reduces your available credit. Even if you mostly use your newer cards, keep the older ones open, and use them occasionally to keep them active.

Call it rules or credit repair tricks, these are just some things that you should factor in when on the quest to repair your credit score. Just remember, if you cannot afford a credit repair company, there are still some steps that you can take to boost your score and get out of debt! Explore our website for the guide!