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How often do you check your credit report?  Probably not enough.  The reality is many people don’t realize how crummy their credit is until they’re rejected for a new loan.  Typically, you’re considered to have poor credit if your score is 619 or below.  If you fall into this category, we have some tips to give your score a boost.

Review your credit report

In order to fix your credit, you need to get in the habit of checking your credit report regularly.  Once a year, you’re entitled to a free copy from each of the three credit bureaus: Equifax, TransUnion and Experian.   Once you have your report handy, go through it with a fine tooth comb to ensure everything is correct.  Common mistakes to keep an eye out for are incorrect balances, unfamiliar accounts and outdated information.

What if there’s a mistake?

If there are mistakes on your credit report, you’ll need to write a letter to each of the credit bureaus addressing the issue.  Your letter must identify the disputed items, explain your position and request to have the error corrected or deleted.  Don’t forget to include copies of any documents that supports your claim.  In most cases, you can expect a response within 30 days.

Road to recovery

TV and radio stations are always running ads promising to quickly repair your credit.  As tempting as it may be to enlist outside help, this is something you can easily handle on your own.  Some tips for repairing your credit include:

  • Paying your bills on time – Since 35 percent of your FICO score is on based on your payment history, simply paying your whole bill on time can boost your score.  To avoid missing or making late payments, set up automatic bill payments with your bank.
  • Keeping your balances low – 30 percent of your score is determined by how much you owe.  Ideally, experts recommend using less than 30 percent of your available credit.
  • Leaving old accounts open – Don’t make the mistake of closing your account once your debt is paid in full.  Generally, the older the account, the better since 15 percent of your score is determined by your history length.

Additionally, you’ll want to use various types of credit but avoid opening multiple accounts in a short period of time since it can hurt your score.