Poor credit is a problem many people face and few know how to cope with. Fortunately, there are legal steps you can take to improve your credit, and you may not have to spend a ton of money doing it.
The first thing to do is to get copies of your credit report from all 3 credit bureaus. Your credit report will vary from bureau to bureau, so getting it from all three is vital.
Look at the information on each report. Make sure that it is accurate.
One of the most insidious problems people face on their credit report is negative information that is not theirs. If there is a debt listed on any credit report that is not yours, contact both the creditor and the bureau showing the incorrect information. The creditor must provide proof that the debt is yours or they must remove it from your credit file!
Get positive credit reports that are not listed added to your credit report. If you are making payments on something, even rent, and it's not showing, get it added to your credit report.
To add an account in good standing to your credit report, send the credit bureau a statement from that account and copies of cancelled checks proving that you have been making payments. The bureau won't always add this information to their database, but most often they will.
Living within your means is very helpful to your credit. If your rent or mortgage payment shows on your credit report and is eating too much of your income, that can be a negative. Making a budget and sticking with it is probably one of the most important things you can do for your credit report and overall financial health.
Once you can afford it, get a credit card and use it just a little every month, paying it off as you go. If necessary, go with a secured credit card, making certain that your use of that card will be reported to the credit bureaus. More than one credit account open is fine, but keep it to a small number of accounts with low balances to avoid excessive debt, temptation and interest charges.
Nothing can legally rebuild your credit in an instant. Expect it to take two years or more for your credit score to improve to where you can get lower interest rates or the loan you need for a car, longer for a home.
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