How to Fix a Credit Score

images (7)If you’ve ever run into financial trouble, you know how frustrating it can be when that information shows up on your credit report. Lenders use the information on your credit report to assess your risk as a borrower, and late or missed payments could make you seem like more of a risk. In addition, your credit score may be negatively impacted.

Luckily, you have some control over your credit score. Just like missing payments and not paying your debts can bring down your score, you can do things to build it back up. It takes some effort, but it is not impossible.

1. Understand your score.

The first step on the path to positively affecting your credit score understands what goes into it. A credit score is based on several different factors in your credit history, including your payment history, how much you owe, how much credit is available to you, the length of your credit history, and the types of credit you have.

However, two things influence your credit score the most: on time payment of your bills and your available balance.

2. Get your debt under control.

Start with getting a handle on your payments and total debt. If it’s tough to keep up with credit card bills, call the card issuer to explain your situation and try to negotiate a payment you can afford. Once you have that in hand, try to keep a balance of less than 30 percent of your available credit limit.

3. Check your credit report.

Start making a habit of checking your credit score and looking through your credit report.

4. Apply For Secured Credit Cards

If you’re building your credit score from scratch, you’ll likely need to start with a secured credit card. A secured card is backed by a cash deposit you make upfront; the deposit amount is usually the same as your credit limit.

You’ll use the card like any other credit card: Buy things, make a payment on or before the due date, incur interest if you don’t pay your balance in full. Your cash deposit is used as collateral if you fail to make payments.

You’ll receive your deposit back when you close the account.

Secured credit cards aren’t meant to be used forever. The purpose of a secured card is to build your credit enough to qualify for an unsecured card – a card without a deposit and with better benefits. Choose a secured card with a low annual fee and make sure it reports to all three credit bureaus, Equifax, Experian and Transunion.