Once in a lifetime, you will experience a bad credit. Sadly, it almost isn’t impossible to avoid this issue. Once that happens, all you can do is to try and repair the situation. Here you have two options. The first one is easier and it involves using credit repair agencies, while the second one is to do it all by yourself.
Straight away we can see that DIY is a better choice. Obviously, you care about your credit the most and you will always try to get the best fix possible. Here we have good news. Repairing bad credit is more than just possible and manageable. Here is what you need to do.
Bad credit borrowers pay much higher interests
The main reason why repairing a bad credit as soon as possible is so crucial is a waste of money, your money! Sad, but the interesting fact is that bad credit borrowers pay $50.000 more in interests only compared to those who have a good credit. During your lifetime, you can expect to waste more than $200.000 on interests only.
A concerning matter is the fact you are unable to get a new credit, due to the fact you already must spend most of your money paying a bad one!
Steps for repairing bad credit all by yourself
Now we come to the interesting part. How to repair a bad credit? As a matter of fact, all you have to do is to follow these steps. Yes, it is easier than you may believe. So check out DIY credit repair – a guide offered from AAACreditGuide.Com.
- Inspect the situation
Obviously, before you move to repairing a credit, you will have to determine is it a bad or good one. To do so, contact the Equifax, TransUnion or Experian and get a full credit report. You can use other services as well, but these three are the main credit bureaus and almost all other work through them.
The credit score may range between 300 and 850. Most people have between 700 and 750, which is considered as a good credit and there is no reason to worry about. On the other side, if the score is below 690, you have a bad credit and you must move to the next step.
- Dispute possible errors
Errors in credits are common. That’s why you must check the entire credit report and get a close idea regarding the mistakes, purchases, all credit cards and etc. Pay close attention to your social security number, address and etc.
In a case an error occurs, you must dispute it. Gather all the proofs you can (credit bureaus won’t accept your dispute without proofs) and mail them. Now, most of them support online dispute systems, but just in case, be prepared to send it via email. It may take up to 30 days to get a response.
- Reduce the expenses
Now you can start with solving one of the main problems. It is spending more than you can earn. To solve the issue, you will have to check the tax records for the last 2 years and determine how much money you make.
Create a budget where all expenses will be shown and then try to reduce the expenses you can. For example, if you spend $500 per month on food, try spending $400. With the rest of the money, pay bills and debts.
- Solve the credit card balance
Each month you will have to pay as much as possible of card debt. The balance should be restored as soon as you can and only then you are going to see the results, in the terms of your bad credit repair.
Try to increase the allowed limit on a credit card. If you use $500 on a card with $2000 limit, you will get a better credit score than in a situation you use $500 on a credit card with $1500 limit.
- Forget about new credits
Obviously, you will have to forget about getting a new credit. All of them sound appealing, but they are far from ideal. You must stay focused on paying down the bad credit rather than on starting a new one.
Perhaps all of this sounds familiar, but these steps are actually presented by bad credit repair agencies. In simple words, they use the same strategy. To sum it all up, don’t get a new credit, pay as much as you can for as long as you must and dispute all errors you can find.