A common question from people who have had credit problems in the past but are ready to try to get a mortgage, loan or new credit card is “how do I fix my credit rating?” It’s smart to know what’s on your credit report before you try to get new credit so you can take action toward trying to improve your credit.
Potential lenders will consider how well you’ve handled borrowed money in the past before agreeing to loan money to you. They’ll look at your credit rating through the major credit bureaus (Equifax, Experian, and TransUnion) to try to determine your creditworthiness.
How is Credit Rating Determined?
Credit rating is usually measured using a credit score, a three-digit number that lets lenders know how likely it is that you’ll pay back the money you borrow. Factors that go into figuring out your credit score include:
- Payment history, which shows whether you have made payments on time in the past
- Total outstanding debt, which includes the percent of available credit you’re using on revolving loans
- Length of your credit history
- What type of outstanding credit you have
- New credit and recent credit inquiries
Credit scores are calculated based on information provided to the credit bureaus. Lenders aren’t required to report to all three credit bureaus. Since each credit bureau may be looking at slightly different information, your credit score may vary slightly between the three credit bureaus.
Review Your Credit Reports
Consumers are entitled to a copy of their credit reports each year, which can be obtained from AnnualCreditReport.com. Look over the information on your credit reports to make sure it’s accurate. Errors on credit reports are more common than people think, and if inaccurate information is being reported, it can affect whether you’re able to get approved for credit or whether you can get the best rates.
Disputing errors is one of the first things you should do if you need to fix your credit rating. Make sure there are no accounts on your credit report that don’t belong to you, that balances are correct and that there are no accounts reporting past due payments if you paid them on time.
Other Ways to Improve Your Credit Rating
If you have any bills that are past due, get them caught up right away. Some people end up making payments late just because they forgot to pay the bill. Setting up automatic payments for your outstanding accounts can help to prevent accidentally forgetting to make payments.
Pay down as much of your outstanding debt as you can. If you have credit cards that are maxed out, consolidating them into a personal loan can help to improve your credit rating. Avoid applying for a lot of new credit at once.
Dovly can help fix errors on your credit report for you so that you can concentrate on other things. We’re an automated credit repair engine, and we know what it takes to make your credit right. Get started repairing your credit and seeing your credit rating increase with Dovly’s help today.