The Spring-Cleaning Guide to Fixing Your Credit
The arrival of spring signals that it’s time to clean house, dust off things you haven’t looked at in a year, get rid of items you no longer want and make those long-postponed fixes to stuff needing mending.
It’s also a great opportunity to spruce up your credit report, which may have accumulated unwanted or incorrect information since you last looked at it. You’ll also want to evaluate your credit cards to see if they are the best ones for your current circumstances.
Here are the spring cleaning tips we recommend for getting your credit picture as bright and shiny as possible:
1. Order your three credit reports and scores
Each of the three major credit bureaus — Experian, Equifax and TransUnion — maintain separate credit reports and scores. Luckily, you can go to a single official source, AnnualCreditReport.com, to order a set of reports.
You are entitled to one free set a year. The website also has a lot of great information to explain how credit reports and scores work — take a little time between housecleaning chores to have a look.
Keep in mind that you’ll only receive your credit reports, not your credit score. However, you can head to this page to check out your score.
2. Review reports for mistakes
The credit bureaus are obligated to fix any inaccurate or incomplete information you uncover in your reports. You can handle it yourself by issuing a dispute letter where you lay out all the facts and include copies of all related documentation.
Thankfully, this process will be much easier in the near future thanks to new changes coming out of the three major bureaus.
Alternatively, you can consult a credit repair organization to help get your credit reports looking shipshape again.
Fixing errors is a good way to improve your credit score
3. Improve a bad credit score
If your credit scores are bad, or if you have no credit history, you can take steps to establish or improve your scores:
- If you don’t qualify for a regular credit card, consider getting a secured credit card from a bank in which you have an account. The bank will lock up a portion of your account balance as collateral against your credit line and use it if you miss a payment.
- Make sure you use a bank that reports secured credit card transaction to the credit bureaus — some don’t, meaning your responsible behavior will go unnoticed by the credit reporting bureaus.
- Alternatively, have someone make you an authorized user on his or her credit card. The credit bureaus will report all the card’s transaction on the credit reports of both you and the owner.
- Pay your bills on time and any large balances, but don’t close credit card accounts when you pay them off. They’re more useful if you keep them open.
4. Consider opening a new line of credit
Although you might see a temporary drop in your credit score, opening a new line of credit has its own longterm benefits if you have a limited credit history or a high debt utilization ratio.
Aside from those tangible benefits, sometimes it’s just nice to have a fresh start with a new credit card.
Photo source: middletownmedical.com