6 dumb mistakes people make trying to fix their credit

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Once you realize that you have a credit problem, it’s important to fix it as soon as you can.

Without carefully considering your credit repair strategy or even seeking professional help, you’re likely to make some common mistakes. Trying to repair credit is no time for trial and error. Make a smart plan and stick to it.

Fortunately, you are already on a great path by being here. Let’s take a look at some mistakes you should definitely avoid.

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Incorrectly disputing credit scores

In some cases, your credit score might be dismal due to a reporting error. To fix this, you need to file a dispute. First, file the dispute with the credit bureaus in order to give them a chance to fix it. If that gets you nowhere, file a complaint with your creditor. Only when you’ve tried these channels is it useful to file a legal complaint.

Don’t be tempted to settle a dispute online. You want to leave a paper trail that documents your attempts to dispute a mistake. Send written documents via certified mail and request a return receipt. Keep a record of any phone calls you made, who you spoke with, any notices you received in the mail and when, as well as any files you sent by mail to the credit bureau.

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Consolidating debt or closing accounts

When you consolidate your debt, everything you owe is lumped together. On the surface, this seems like a great way to keep all of your ducks in a row, because you only have one debt payment to worry about instead of three or four.The downside is that your debts may accrue greater interest. Also, a credit report that shows several well-managed accounts is more favorable than a credit report with one account.

By getting yourself organized and paying down debts on your current accounts, your credit report will be a better representation of your fiscal responsibility.

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Avoiding credit cards

A debt-free life has great appeal, but before you renounce credit cards entirely, think about whether you’ll need a loan in the future. If you have no credit history at all, lenders lack the information that helps them decide if you’re worth the risk.

Maintaining at least one credit card is a good safety measure and it will build your credit score, which you’ll be thankful for if you need to take out a loan after some kind of emergency. While you work to improve your credit, take care to use your one credit card responsibly, when you know you already have the money to pay the balance.

 

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