Loans from banks and other lenders are always classified as a debt and it impacts on the credit report and score of the borrower. Quick and prompt payment of the interest and actual amount borrowed as loan makes the credit record stay on the positive side. For many people with bad credit, they always want out of the myriads of debts they have to balance and perhaps build a healthy and impressive credit score and report to be eligible for personal loans. Most however, do not know how to fix their credit. Below are tips to help you fix your credit and build a good credit score.
- Review and Examine your Credit Report
The first step to fixing your credit is to know and understand how bad your credit is so as to map out a good plan for its recovery. Ask and request for your credit report from one of the two credit report bureaus (Equifax Canada and TransUnion Canada) and examine the report critically. Check if there is any error as regards any of the previous loans you got. From the report examination and review, you sure need to know your credit situation.
- Promptly Pay your Bills
Any bill can hurt and damage your credit score and report. To fix your credit, pay your bills fast and promptly. This is a good step to recovery. Make sure you are smart with this. You should pay bill on your mortgage first because it is likely to be reported and included your credit report while water bills and other utilities may not likely be reported.
- Plan on Paying Balances
Make a long term plan to pay up your balances because it is very effective in fixing your credit. Honestly, this is rather difficult for many to do but if you are very focused on fixing your credit, then you have to be disciplined with your finances. Make good and realistic budgets, spend wisely on prioritized items and start paying off your outstanding balance to fix credit.
- Raise Credit Limit
One of the very nice trick and tweak to fixing credit is by requesting for a raise or increase in credit limitation on your credit account. Credit account has a limitation which you cannot exceed when borrowing. You can reduce your credit balance because, having a balance that is more than 50% of available credit will influence your score negatively. You can reduce your balance or increase your credit limit. Improve your ratio by raising the credit limit. For instance, if you owe $2500 on a limit of just $5000, you can improve your ratio by raising the limit to $7500.
- Create another Credit Account
Opening another credit account and leave the old accounts with no credit. Leaving it with no balance will improve your credit score. You must however be very disciplined with this method so that you don’t plunge into some more debts. The goal for opening another credit account is not to borrow more money but to fix your credit. Keep that in mind and be guided.