Improving the credit score means qualifying for a better rate of interest and getting better loan terms. It holds irrespective of why you need a loan – to buy a home, buy a car, start your business, expand your business, etc. Now, the real problem with fixing a bad credit score is that you would only consider doing it when it starts affecting you. But how do you fix it?

Here, we have come up with a few tips to fix a bad credit score. Please know that it isn’t impossible, but it isn’t something that you can achieve overnight.

• Find your current credit standing
  Before you start with credit repair, you need to file for a credit report from all the three credit reporting agencies (CRA) – Equifax, TransUnion, and Experian. The score that you find on your credit report will be between 300-850. Now, if the score is between 700 to 740, it is a good credit score. So if you have a score in this range, or higher than that, you will qualify for a loan with good terms and a low-interest cost.  
  

• Are there any errors in the credit report?
  If your credit score is not in the ‘good’ range, you need to analyze it deeply. Check if there are any errors in it. Though errors are usually not common in a credit report, they can always happen. If the information is correct, you shouldn’t challenge it. However, if there are errors, you have to get them cleaned up. So, accumulate all the information present with you to challenge the error, and then write a letter to the CRA with the proof that you have collected. Explain the mistake thoroughly. The CRA will take approximately 30 days to reply to your mail.
• Do not overspend
  After you have all the errors rectified, you need to ensure that you are only spending the amount you can repay.   So, for this, you need a budget. Prepare a budget, allocate your fixed expenses, leave a portion as savings, and then plan out the other expenses that you can afford.
• Three real ways
  The above-listed are the tips that may or may not help you. There are only three methods or tips to fix a bad credit score in the long run. These include the following:
  • Not applying for any new credit
    Your credit score depends on the credit age, so any new credit would undoubtedly bring down the score.
  • Paying your debt, including your credit card bills
    When you are using a credit card, know that it is an important method of building a credit score. So, do not let yourself down by spending more than you can pay back monthly.
  • Clearing all the bills timely
    Pay off all the bills – utility bills along with the other dues in time.