Can You Fix Credit in a Year?

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When you have bad credit, you want to do whatever you can to clean up your credit report as quickly as possible. You may want to buy a house in the near future, so you need to improve your credit score so that you can get a mortgage. If you are thinking about getting a new car, improving your credit will give you the best interest rates. You are probably wondering how long it takes. Read on to learn what you can and can’t do to improve your credit, and how long it takes.

How Is a Credit Score Determined?

To find out your credit score, you need to understand your credit report. By law, you are entitled to a free credit report every year. You need to order it and look it over.

The first section of your credit report will have your personal information such as your name, any other names you may have used, your address, your phone number, your employment history, and more. You will want to review all of this information to make sure that it is accurate. Sometimes you will find another person with a different middle initial or other information, and you should dispute and have this information removed from your account.

The next section will contain any legal action that is related to your financial history. This might include judgments, bankruptcies, liens, or wage garnishments. You should make sure that this information is accurate as well.

The third section has all of your creditors. It will list your credit cards, mortgages, auto loans, personal loans, and any other credit you use. It will also state your original credit limits, your current balance, your payment history, any missed payments, and more. You should check this section thoroughly to make sure that everything is accurate.

When the credit bureaus determine your credit score, they use all of the information in your report, and they look at five basic categories, which are as follows:

  • Your payment history (35% of score)
  • Your credit usage (30% of score)
  • The length of your credit history (15% of your score)
  • The type of credit you have (10% of your score)
  • Credit inquiries (10% of your score)

It is important to note that 65% of your score is determined by your on time payments and your credit usage. The credit bureau wants to see you using less than 30% of your available credit, so you should make every effort to pay your balances down to this point.

How to Improve Your Score

The first thing you can do to improve your score is start paying your bills on time. In fact, you should see your score improve after six months of on time payments. This is extremely important, so you should do everything possible to pay your bills on time.

The next thing you can do is lower your credit usage. The credit bureau wants to see your credit usage under 30%. This means that you should never allow your balances to be greater than 30% of your available credit. For example, if you have $1,000 of credit available, you should make sure that your balance is $300 or less.

Those two factors will help to improve your score. Each time you pay down your balance, your score will improve. You should check your credit report to make sure that the credit card company is reporting the decrease in your credit usage.

If you are unable to pay your balances down, you can increase your available credit. You can apply for a new credit card. If you have bad credit and have trouble getting approved, you can consider getting a secured credit card. This type of credit card is good for people with bad credit because you will make a deposit and the amount of your deposit will be your credit limit. You can boost your available credit right away by doing this.

In addition, you can choose to have your cell phone and utility bills reported to the credit bureau. As long as you pay them on time, they will help to give your score a boost.

You can achieve all of these things in about six months, and your score should improve during that time. These are all items that are within your control.

Derogatory Marks on Your Credit Report

When you look at your credit report and see derogatory marks, you need to determine how to correct them. Most negative information stays on your credit report for seven years, including the following:

  • Foreclosures
  • Repossessions
  • Late payments
  • Short sales
  • Charge offs
  • Tax liens (from the date of the payment)
  • Chapter 13 bankruptcy

Collection accounts will stay on your report for seven years plus 180 days, and bankruptcy other than Chapter 13 will stay on your credit report for 10 years from the date of filing,

The best way to handle late payments is to start paying your bills on time. After six months, the former late payments will not hurt your score as much. The other derogatory marks will hurt your score less after two years, so you will need to wait it out. However, you can work to pay down balances in the meantime.

Rebuilding Your Credit

In addition to making your payments on time and paying down your balances, you will want to rebuild your credit. If you are able to open a new account, you should do so. Make sure that you do not use it to increase your spending. You need to remember that having credit that you don’t use is going to help your score. There are different credit cards out there for people who have bad credit.

If you don’t qualify, you may be able to get a secured credit card. When you apply for a secured credit card, you will make a deposit with the company, and this will be your line of credit. You will pay the bill every month, just as you would an unsecured credit card. Be sure to keep your balance low. Use the card each month for something you need to buy anyway such as a tank of gas, and pay it off every month. This will help you rebuild your credit.

If you have accounts that are behind and are having trouble catching up, you might consider a consolidation loan. Just make sure that you pay the loan payments on time every month. This will help to improve your score.

Check for Inaccuracies on Your Credit Report

One of the reasons that it is so important to check your credit report regularly is that it may contain inaccurate information. You may find items that are inaccurate, such as the following:

  • Duplicate accounts
  • Inaccurate accounts
  • Accounts that don’t belong to you
  • Incorrect inquiries
  • Inaccurate address or name
  • Employment history

If you find anything that is inaccurate, you will want to dispute the information. You can call a credit repair company for help with this. These companies have experience in working with clients to dispute inaccuracies on their credit reports. Keep in mind that a credit repair company cannot help you remove valid information from your credit report, but it can help you dispute anything that is incorrect.

When you call one of these companies, they will go over your credit report with you. They will tell you that you can dispute this information on your own, and they will give you a contract if you hire them. Make sure that you hire a reputable professional company if you are looking for this kind of help. Removing inaccurate information will help to improve your credit score, so it is important to check your credit report regularly.

Final Words

If you find yourself in a position where your credit score is not what you want it to be, you can take steps to start improving it right away. The first step is to start paying your bills on time. No matter what, this is very important. In addition, you should pay down your balances until you get your credit usage under 30% of your available credit.

In addition, if you find inaccurate items on your credit report, you need to file disputes with the credit bureaus. You can file these disputes yourself, or you can hire a credit repair company to file the dispute on your behalf. It is more common than most people realize to find incorrect items on a credit report. Having these errors removed can help your credit score.

We can help you file your disputes. Although you can do it yourself, we have years of experience and know all of the rules and regulations as dictated by the Fair Credit Reporting Act and other laws that protect you. Removing these items can help your score right away, so you should make sure that you check your credit report and dispute anything that is incorrect. Whether or not you can fix your credit in a year depends on what is affecting it. You can start improving your credit score right away by making your payments on time and reducing your credit usage.

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We encourage people across the nation to live a life with more options. The Grandaddio Credit restoration and advisory program is a great step in that direction. If your your credit reports are hurting we know how to help.

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