Your credit score is one of the most important numbers that will have an influence on your life. Your credit report is a document that carries with it tremendous weight and can drastically impact your ability to buy a home. When your credit has taken a hit due to identity theft, unpaid credit card debt, other unsettled debts and loans going into default, the process of buying a home becomes significantly more taxing. You’re left with higher interest rates and are pressed to make a larger down payment to offset the damage your credit has sustained.
So, what is a person to do? You don’t have to be bogged down with bad credit forever! Instead, get proactive and take these steps to help you improve your credit score and report.
Review Your Credit Reports
Every person is entitled to a free copy of their credit reports from all reporting bureaus, once annually. Make sure to get a copy from each reporting agency and examine them closely. The reports will show you where your credit has taken the biggest hits. It will also reveal if there were any errors made in the reporting process.
Quite unfortunately, it is not at all uncommon for information to be inaccurate on a credit report. Basic information, like your name, could be inaccurate. Larger errors have occurred too, some of which have the ability to drag a credit score down by many points.
Viewing a copy of your credit report will also inform you of the possibility of identity theft. If someone else has accrued debt with your information, you can take the proper actions to protect yourself from fraud and have the charges disputed.
Pay Your Outstanding Balances
If there are debts outlined on your credits report that you know you accrued yourself and still owe, get on top of paying them back! Call the creditor and arrange a payment plan, if necessary. Once a debt has been settled and your account with the lender closed, your credits score will receive a nice boost.
It’s best to focus on paying off newer and high-interest accounts before accounts of any other type. Paying off your newest accounts helps by:
- Reducing your total debts owed.
- Leaving longer lines of credits intact, which can reflect positively on your credit.
If you’re wondering where to get the funds to pay off your debts, a second or private mortgage in Toronto will allow you to use your home=s equity to pull out cash.
Never Shirk Your Debt Payments
You might be able to push off that cell phone payment for another week, but you shouldn’t. Reliable, on-time monthly payments leave a very positive impact on credit reports and scores. This is the best way to ensure a lifelong positive relationship with your creditors. Even one late payment can drag your credit rating down, so avoid making late payments whenever possible.
To help avoid accidentally paying late on your debts, consider these tips:
- Use a planner to keep track of due dates.
- Set phone alarms to remind yourself to pay on time.
- Set up auto-payments whenever possible.
Restoring damaged credit is a great way to improve your overall quality of life. Following the advice above will make it possible for you to finance the things you want in life.