How can a bad credit score be improved?
It is hardly unusual to encounter consumers who are struggling financially because of a bad credit score that they have due to poor financial decisions in the past. Perhaps a credit card bill simply became too high, and missed payments started to stack up despite the insistence of collectors. Alternatively, many recent graduates find themselves deep in student loan debt and struggling to find work, resulting in tough financial times and a greater risk of default. One silver lining to this otherwise difficult situation is that there are concrete ways to improve a credit score, no matter how desperate the situation may appear to be at first. While some of these basic steps can be taken by anyone looking to improve their score, other measures may require some outside help.
Starting easy: better spending habits
The first and easiest step to improving a suffering credit score is, of course, making sure the problem does not get any worse by halting all credit card spending. The levels of debt that result in a poor credit score may seem imposing at times, but it is impossible for a debtor to spend their way out of them. Rather, it is essential to consistently pay down existing debt and focus on sources of debt with high interest rates, such as credit cards. Credit scores are calculated in part on how much available credit someone is using, so it is essential to pay down cards that are close to their limit. Conventional wisdom maintains that it is best to begin with a card that has the highest interest rate, as this is the best investment in the long run. Regardless, a poor credit score is not likely to improve unless this initial self-discipline comes into play.
Supplemental aid: a credit repair company
The guidelines listed above are perfectly attainable for some consumers who hold a lot of debt; however, others will find that their credit is too unmanageable to be fixed without some kind of outside advice. In these situations, some consumes opt to consider a credit repair company. Credit repair companies provide an extra layer of research into past purchases for credit card holders who need to verify that all of their previous purchases are valid. After hiring a credit repair company, this firm will review a debtor’s credit report and spending history in order to flag any line items that seem like they are signs of incorrect charges. For those who have a great deal of credit card debt, these small inconsistencies can quickly add up to a significant portion of debt. Once a credit repair company has identified a set of charges that are likely erroneous, they will contact credit reporting agencies to fight any items on a credit report that appear to be incorrect. Thus, a credit repair company is able to work as a second layer of oversight and verify that the information on a credit report is accurate.
The most important step in increasing a credit score is to remember that these kinds of improvements are long-term goals, not sources of instant gratification. While a credit repair company may serve as a helpful resource, some companies exaggerate what they are able to accomplish: while a credit repair company may be able to find faulty charges, it will never be able to make debt “disappear,” no matter how their services may be advertised. In short, it is never too late to improve a credit score that has been damaged by reckless spending, provided one has the tools.