Studies show that 56% of Canadians have never checked their credit scores. While many people don’t have an interest in checking their credit, others believe that checking their credit score will decrease it.
However, having a low credit score can make it more difficult for you to reach your financial goals. Learning more about your credit score and how you can increase it will make it easier for you to be financially stable.
Do you want to learn more about the ways you can clean up your credit? Keep reading these seven practical tips for credit repair.
1. Check Your Credit Report
One of the first things you can do to clean up your credit is to check your credit report. You can check your credit report through any major credit-reporting agency.
Typically, you can get a free copy of your full credit report once a year without it affecting your credit.
When you get a copy of your credit report, you should check your report for any discrepancies. Make sure you read every line of your report to see if there are any errors.
For example, if you see an account that you don’t recognize, it could be someone else’s information that is in your credit report by mistake. It could also indicate identity theft.
Because errors can lower your credit score, checking your credit report for mistakes can help you avoid unnecessary problems with your credit.
2. Dispute Mistakes
If you notice that there are mistakes on your credit report, you should dispute these with the credit reporting agencies.
The mistakes could be anything from accounts that don’t belong to you to mistaken identity and more.
When you dispute a mistake on one credit report, make sure you check with the other credit bureaus to see if the problem is limited to a single credit reporting agency.
Most credit bureaus will allow you to dispute these mistakes online. Getting them removed from your credit report can instantly boost your credit score.
3. Remove Past-Due Accounts
Another important part of cleaning up your credit report is removing past-due accounts from your report. You may have a notice on your credit report if you missed your credit card payment.
The longer you wait to repay your debt, the more it will affect your credit score.
The first thing you need to do is pay off your entire past-due balance. Then, you can write a goodwill letter to your creditor to ask them to forgive this past-due payment.
If you had a good history of payments, your creditor may be able to forgive this and remove the past-due account from your credit report.
4. Never Miss Payments
If you want a high credit score you should never miss payments. One of the biggest factors that make up your credit score is your payment history.
If you always make your payments on time and you never miss your loan or credit card payments, it shows that you are a reliable borrower.
Something that can help you improve your payment history is to set up automatic payments. This way, you will always make the minimum payments for your debts and you will never forget to pay a bill.
5. Avoid Applying for Too Many New Accounts
Something else that you can do to clean up your credit is to avoid applying for too many new accounts. While it is important that you have credit accounts to build your credit, submitting too many credit applications can decrease your score.
This is because every application can lead to a hard inquiry on your credit score.
Plus, having several new accounts will lower the average age of your credit accounts which can lower your score.
6. Improve Credit Mix
Improving your credit mix can also help you avoid a bad credit score. Your credit mix is the different types of credit accounts you have. For example, you may have credit cards, student loans, a mortgage, and even car loans.
If you have several different types of credit, it shows that you are good at dealing with your money.
The best way you can improve your credit mix is to have a mix of revolving credit and installment credit.
While installment credit requires you to make monthly payments, revolving credit gives you the option to forward your outstanding balance to the next month.
7. Lower Your Credit Utilization Ratio
Finally, you can improve your credit score by lowering your credit utilization ratio! This is the amount of credit you use compared to how much you have available.
Typically, it is best to use as little of your credit as possible. If you have too much debt or rely too heavily on your credit cards, you will be a bigger credit risk and your credit score will suffer.
Instead, you should only use the credit you actually need. Most companies prefer that you use less than 30-40% of your credit.
If you still want to use your credit card for everyday purchases, you can do this as long as you pay off the balance as quickly as possible!
Need to Clean Up Your Credit? We Can Help
Your credit score is an important factor that can determine whether or not you are able to get loans or other types of financial assistance. Following each of these tips can help you clean up your credit report and get a high-credit score!
If you need help improving your credit, Kingcash can help! We offer free financial advice and can help you improve your financial situation.
Check out our website today for everything you need to know about improving your financial situation.