Small Changes Make Big Improvements to Your Credit

Your credit report is the biography of your finance. It tells the story of your income and expenditure by detailing your experience with credit cards, loans, and other financial vehicles. A significant number, your credit score, comes from the information in your credit report. Three credit bureaus, Experian, Equifax, and Trans Union each gives you a different credit score based on your financial history. The three scores combined make up your FICO credit score. 

You might be wondering what this means.

Your credit score will determine your ability to make significant financial transactions. When you try to buy a car, purchase a home, take out a loan, apply for a credit card, or apply for a job, your credit score comes to play.  It determines whether you are eligible to buy a house, take a vacation, and make other critical financial decisions. It is, therefore, necessary that your credit score hit a required benchmark, else you won't be able to fare well in life. 

If your credit score is below the required level, you don't have to worry much. Luckily, there are simple steps to repair your credit. Actions to make a significant improvement in your credit include:

Get Your Credit Reports 

Knowledge, they say, is power. Your credit reports provide you with all the information you need on your financial history. You get to know whom you owe, how much you owe, and a picture of your payment history on each of the accounts you owe. Past credit accounts may also be included. They also provided a lengthy explanation of what is impacting your credit score so that you can make the necessary changes. You can get a free credit report every year from each of the credit bureaus individually or through their official website, annualcreditreport.com. 

Get Your Credit Scores 

Your credit scores are numbers ranging between 350 and 850 and are placed on your financial history. Each of the credit bureaus gives a distinctive score, but the scores combined creates a single FICO credit score. It is good to get your credit score at least once every six months to keep track of changes over time.

Create a Plan

Armed with the necessary information you need from your credit report, you can go ahead to strategize on how you will tackle the issues therein. For each of the accounts, you can develop a plan to pay off debts or dispute the information, depending on the legitimacy of the debt. 

Dispute Incorrect Information 

Everyone makes a mistake. There is a possibility of incorrect information being on your credit report. If this happens, dispute each of the records individually through the credit bureau. To get more information on the debt for clarity's sake, you can contact the creditor. The bureau will surely make the necessary corrections if the information is wrong. If not, explanations will be made to you on how they arrived at the figures.

Pay Off Your Debts 

Debts negatively affect your credit score. Pay them off one after the other. You can start with the smaller ones and then focus on the larger ones. It is also wise for you to contact your creditors individually so that you'll make plans on how to pay them.

Follow Up 

You must track your progress. Hence continue to check on your credit scores and reports and follow up with creditors to keep track of your progress.

Pay Your Bills on Time 

Build great credit right away by paying this month's bills on time. Make a plan and budget appropriately, so you have the funds to pay before the due date. It is one of the most significant ways you can improve your credit.

 Little drops make the ocean. Improve your credit by making small steps for a significant impact. The longer you have a favorable credit experience, the higher your score will go—work on repaying your debts over time. Before long, you'll see your credit score begin to rise.