7 Simple ways to repair and improve your credit report

Do you have a blemished credit report due to a series of financial misfortunes? If so, then you're not the only person in this country. Several people have poor credit report due to various reasons. Unfortunately, this report can determine if you can qualify for a line of credit and how much you'll pay on the interest rate to the creditor.

Ways to repair your credit file

Check out the do it yourself credit repair steps and improve your financial life gradually.

1. Find and fix the mistakes on your credit report:

You're already suffering for the mistakes done in the past. You'd obviously hate to suffer for the mistakes you haven't done. Around 70% of the credit reports contain errors in them. Get a free copy of your credit report and take steps to fix the errors that are hurting your score.

2. Work out a repayment plan with creditors:

If you've missed several payments, then contact your creditors fast and try to work out a repayment plan. You can even consult a debt consultant to arrange a payment plan on your behalf.

3. Give importance to payment history:

Your credit life can't improve without a good payment history. You can build good payment history by making timely payments to all your creditors. If you're not good at remembering payment dates, then consider getting payments deducted from your checking account automatically.

4. Retain old accounts as much as possible:

Don't close your old accounts as they have a significant impact on your credit score. Old accounts make an important part of the length of your credit history. If you're having problems in paying interest on a particular credit card, then talk with the creditor to reduce it.

5. Obtain a secured card from the bank:

Get a secured credit card to rebuild your tarnished credit. You can get one after depositing a specific amount at the bank.
For instance, you deposit $500 against the card. This means your credit limit on the card is $500. You can make purchases worth $500 only. Once the amount is exhausted, you can replenish the amount and start using the card again. This helps you build positive payment history as there are less chances of making a default.

6. Lower your credit utilization ratio:

A higher credit-utilization ratio is bad for your credit. Try to minimize the ratio to less than 30%.
For instance, you've 2 credit cards. You've one credit card with a huge credit limit but small outstanding balance. You've another card with small credit limit but huge outstanding balance. What you can do is, transfer the debt from the card with small credit limit to the one with high credit limit. The debt won't increase the credit utilization ratio by a great extent.

7. Try to reduce the number of hard inquiries:

Usually, hard inquiries are triggered when you apply for credit cards or loans. Hard inquiries hurt your credit. So, try to avoid applying for too many credit cards and loans.

Final words

If you want to protect credit from identity-theft, then what you can do is put a security freeze on your credit report. You can inform the credit bureaus about identity-theft and put the fraud alert on your report. This would prevent imposters from opening new accounts in your name. You may have to pay $10 to freeze and another $10 to unfreeze your credit report, but that hardly matters if you really value your credit life.