Poor credit affects your life in more ways than the average person realizes.
Low credit scores sabotage the chance of loan approvals. They also create higher interest rates on loans or credit card applications that do get approved. Limiting your chances for a well rounded loan and creating much stricter contract terms.
You shouldn’t have to depend on a cosigner for loans needed in everyday life. Low credit scores make you dependent on others for the purchase of things such as a new car, home, or even just renting.
If you own a business, low credit can prohibit you from expanding. Though you can reach out to credit counseling agencies, getting your finances in check is only the beginning.
Fixing your credit score isn’t an overnight fix, but it is possible! At Pro Finance we specialize in credit repair. Helping you improve your personal or business credit with our easy step-by-step process.
Evaluating Your Credit
To get a better understanding of your credit, Pro Finance begins by evaluating your credit report from all three major credit bureaus:
- Equifax
- TransUnion
- Experian
Running it through an easy process to check your credit history, derogatory marks and other possible dings against your score.
After the reports are confirmed and deemed accurate, we then create a personalized plan to work with your creditors and dispute any errors negatively affecting your score.
By going through a credit repair agency, your creditors will receive cease-and-desist letters advising them to contact ProFinance directly. As professionals in credit repair, we also know how to expertly communicate with creditors and improve your credit score as soon as possible.
Improving Payment History
When it comes to fixing your credit score, it takes more than one singular step. Taking multiple, easy steps leads you on the path of improving your credit over time.
Your payment history is one of the top components in calculating your FICO credit score. Late and missed payments reduces your credit score. These negative reports can impact your score for up to 7-10 years.
The more debt you have and the more recent payments you may have missed will bring your score down significantly. Keeping all accounts up to date and making all payments on time will most often raise your credit score.
Credit Utilization Rate
Most credit bureaus use scoring models to compare how much you owe to how much available credit you have. Better known as the balance-to-limit ratio.
High credit utilization rates will bring your credit score down. It’s recommended you keep your debt to credit limit at 30% or lower. You can either lower this rate by making payments and bringing your debt down, applying for a credit increase on accounts, or opening a new credit account.
Most who struggle with creditor debt will find the thought of opening a new account appealing. If opening more credit tempts you to use it and only further increase debt, this probably isn’t the best option for you.
Likely, the better option is to decrease existing debts by paying them off over time. Making consistent payments on time will not only give a more positive credit history, but improve your credit score in the near future.
What’s Your Credit History?
As mentioned before, most credit bureaus have a FICO credit scoring model that determines your score. Another component that applies to your score is your credit history.
Usually calculating in your oldest credit account and averaging the age of all open accounts. Those with longer credit history are usually rewarded. If you’ve paid off a credit account, you should consider leaving it open. Leaving a good source of credit history.
If leaving accounts open once they’re paid off leads to, once again, temptation in spending then you would probably benefit more from closing the account.
New Credit
As having open and aged credit accounts does look good on your credit score, be careful of opening too many at once. It can appear irresponsible to creditors when looking at your accounts and therefore negatively impact your credit.
Whenever applying for new credits such as store credit cards, car loans, or mortgage loans, consider the impact it will have on your credit score.
Building Credit
Building your credit with a credit card can be very effective.
When used wisely, credit cards can positively impact your credit score.
It’s important to well manage your account and make payments on time. No maxing out your credit limit either. That will only negatively impact your credit score.
Start by finding the right credit line. If you’re just getting started, look for a card with a low spending limit and pay off the full balance monthly. This will help build your credit history without putting you into debt.
If you don’t have enough credit to be accepted for a credit card, there are other options to build your credit score. Following are a list of ways to fix your credit without a credit card:
- Pay on student loans monthly. Student loan debt is reported to credit bureaus. Though they take a while to pay off, paying on them diligently will help improve your credit history.
- Take out an auto installment loan. The interest rates may be higher at first, but in the future you can refinance and having a loan in your name, while making on time payments increases your credit score.
- Apply for a credit-builder loan. Banks and credit unions will usually work with first time credit applicants to obtain a loan.
- Ask for a co-signer on a loan. If you can’t get approved for any loan on your own credit, ask a dependable co-signer to help.
- Report positive payment history. Ask your landlord and utility companies to report your positive payment history to the credit bureaus.
Though building credit is a long-term investment, you can always start somewhere. Time is the only thing that will truly fix your credit score, on top of actively trying to improve it.
Credit Counseling
If you’re struggling with poor credit, an important step to take as well is adjusting your finances and correcting poor payment planning.
Credit counseling agencies help you create a debt management plan and get your credit payments in order. Preventing you from missing future payments, or unpaid bills that are bringing your score down.
They may review your finances and help you learn how to better manage them yourself. From there, it’s still recommended to professionally dispute and work with creditors through a credit repair company. At Pro Finance, we make it easy and do the hard part for you!
Good Credit Takes Time
Credit reporting agencies only periodically update credit history. It can take up to 30 days, or sometimes longer for your account to become completely updated after making payments.
When applying for loans or other credit accounts, that also takes time. Using your credit report, they take into consideration all factors if they decide to lend to you. This process doesn’t happen instantly and having poor credit history may lead to loan denial, or high interest rates.
It’s true that negative credit can affect your score for up to 10 years, but correcting your financial plans and improving your credit is a good start. Paying towards your credits and improving things such as your credit utilization score will build your credit back up over time.
Credit Repair With Pro Finance
Fixing your credit score isn’t something that can be done instantly. Communicating and reaching out to multiple debt collectors takes time and knowledge.
Not only does Pro Finance dispute credit errors and communicate with debt collectors for you, but they can guide and instruct you on other financial plans. Helping you add, or get rid of accounts, manage your credit and balance your other types of credit.
If you’re wanting to improve your personal, or business credit score, contact Pro Finance sooner rather than later. Improving credit scores takes time and we’ll help you start the process.
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