How to Repair a Bad Credit History

written by Bill Airy · Last modified on September 25, 2019

It is an undeniable fact that the world runs on credit. Whether you are buying a new car, a house or are trying to get a good deal on your insurance, your credit score becomes a vital part of the decision process. Companies will utilize your credit score to determine whether you are a good investment for them. So, if you are struggling with a poor credit rating, it is vital to take the appropriate steps to repair your credit score. Fixing your credit history is never an easy task. As such, it will require time and discipline to achieve. But have no fear, we have come up with some easy to follow tips to fixing your credit store.

1.    Fix your Payment History

Your payment history has a significant effect in enhancing your credit score. Most people are oblivious of the damage that a late or missed payment has on their credit score. If you have late/missed payments, you can fix this problem on your credit report in the following ways:

• Pay your bills on time. Going forward, ensure that you are not late with, or miss making payments when due. Delinquent payments give rise to potential problems such as penalties and collection fees, which in turn impact your credit history.
• Stay current with all your payments: If for some reason you are late or have missed payments, pay up and then ensure you pay your bills on time going forward. Staying current with your bill payments fixes your credit score with time.

2.    Handling Amounts Owed

Even though repairing your credit history might be top on your agenda, reducing your outstanding debt has far-reaching effects on your overall well-being. Unfortunately, achieving this could prove a bit challenging. Some tips to observe include:

• Paying off your revolving debts once and for all. Some people prefer to move their debts around, from account to account, in order to make it seem like they are honoring payments. The problem with such tricks is that they will temporarily improve the credit score but in the long run lead to financial crisis.
• Striving to minimize amounts owed to lower your credit utilization. Granted, it takes much financial discipline to keep the outstanding balances on credit card debt or other forms of revolving credit low, but it is a necessary measure in improving credit score.
• Coming up with a payment plan to enable you reduce debt on all your accounts. Your payment plan should prioritize clearing the high interest debts first.
• Avoiding short-term measures such as closing down unused credit card accounts or increasing available credit by opening new revolving credit accounts. Note that closing a credit account doesn’t erase it from your credit report.

3.    Manage Your Credit Wisely

Some of the problems with debt that end up damaging your credit history can be avoided from the onset. Tips to help you escape the debt trap include:

• Avoiding unnecessary credit. Opening credit accounts that you do not need only end up messing your credit score since you are more likely to fall back on payments on some of these accounts or credit cards.  Besides, more credit means more money available to spend leading you further into debt.
• Creating rapport with your creditors to enable you negotiate for good rates when shopping for loans. A good relationship with lenders could also help you avoid late fees and/or penalties when facing some financial difficulties.

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