Checking your credit can feel like a slippery slope. You’ve probably heard checking your credit score can lower it, and you might not even know what items are included on your credit score. Maybe it all felt so intimidating, you chose to ignore it altogether. Now, you’re looking to make a big purchase—apply for that mortgage loan, lease a car, or get a loan to finally start that business you’ve always dreamed of.
The thing standing in your way could be your credit. If you’ve ignored your credit and are finding your score is too low to get approved for the loans or purchases you need, it’s time for a credit clean-up. There are a number of ways to improve your credit score, including working with credit clean-up services in Houston.
Cleaning up your credit is recommended for everyone, no matter their credit score. Here are some common ways you can clean-up your credit:
Three Tips to Clean Up Your Credit
Check Reports for Inaccuracies
You can check your credit reports as often as you want without it negatively impacting your credit score. We recommend checking your credit report a minimum of once a year, and anytime you apply for anything requiring credit (credit cards, loans, etc.). Think of it like going for your annual physical—you’re just checking your credit for any issues.
Checking your reports regularly can also provide “quick fixes” for your credit. Consider credit repair versus credit counseling: credit repair is when you review your reports for inaccurate or outdated information (items that have been on your report for more than seven years) and appeal to the credit bureau to remove the inaccuracies. Credit counseling, however, is a more holistic, long-term solution. It focuses on money management and developing a plan to pay off your debts.
We recommend checking your reports regularly so you can conduct credit repair, and remove the inaccurate/outdated information promptly. Remember, you can only remove outdated or inaccurate items from your report. Items that are still in that seven-year window or are accurate, such as late payments, cannot be removed from your credit report.
Pay Off Outstanding Collections
If you have bills that are past-due and have gone to collections, you’re not alone. The Urban Institute reported that in 2021 alone, nearly 28% of Americans had debt collections on their credit report. Collections can hit your credit score hard, and while paying off your collections won’t remove them from your report, it can help.
Newer FICO score models treat paid collections with less weight than unpaid collections. They may even ignore certain paid collection items on your report. Even if it isn’t removed or ignored from your report, lenders and creditors can see you’ve already paid what you owed. This gives you more room to negotiate with them to prove you’re trustworthy.
Lower Your Credit Utilization Ratio
Your credit utilization ratio is how much credit you’re using in comparison to how much you have available. The lower this ratio, the better. When you use too much or maximize the amount of credit you have, it can indicate to creditors that you rely too heavily on your credit cards for daily expenses. This can flag you as a credit risk and lowers your score.
You can start by paying off larger amounts of your credit that you’re currently using or apply for a balance transfer card.
Need Help? Ask a Professional
Cleaning up your credit report can be a tedious task, and can be daunting if you’re unfamiliar with credit reports or other financial jargon. Professional credit repair services, like those of The Phenix Group, help people every day navigate the murky waters of credit and debt. Our skilled professionals can offer your financial guidance, comb through your reports, and advocate on your behalf to have inaccurate or outdated items removed.
Working with experts can save you time and give you peace of mind. Leave no stone left unturned with The Phenix Group. Call us today for your free credit repair analysis!