If your credit is less than stellar, there are some steps you can take right now to fix it so you aren't held back in the future. Before you improve your credit score, you have to know what's impacting it.
"We want to know everything that's on our report," Lilias John, a financial consultant and author with Your Financial Stylist, said. "And we want to know whether it's right or wrong or other."
Here are the 5 steps to take to clean up your credit:
1. Pull all credit reports
2. Check for errors
Make sure all debts listed actually belong to you. If you're a junior or named after a relative, you might find something impacting your score that doesn't even belong to you.
"We see this a lot of times with fathers and sons," John said. "This is not mine, it's my dad, and it's on my report."
He says to check that payment history and reported balances are correct. If you find any errors, file disputes with each reporting agency directly.
WCNC Charlotte is always asking "where's the money?" If you need help, reach out to the Defenders team by emailing email@example.com.
3. Call your creditors
Remember, all valid debts must be paid so don’t fall for scams claiming to cancel debt for a fee.
4. Always negotiate
Creditors can and will work with you but be careful.
"The one thing you don't want to do is settle," John said. "Settlements are a little tougher because they go onto your credit as negotiated or settled-for-less-than the amount. There are creditors who will allow you to negotiate and pay a lesser amount, but not have it written as a settlement on your credit. That's going to be an important distinction."
If you’re in need of assistance or just want some extra support, utilize free, nonprofit advocates like the National Foundation for Credit Counseling.
5. Make payment arrangements and make sure you keep them
If you're struggling to get caught up and make an arrangement, it's critical that you keep up those payments. If not, things can get bad quickly.
"They can file a judgment against you if you don't pay within a certain amount of time and that sticks on your credit similar to a bankruptcy," John said. "It goes near the top header of your credit report and it can stay there for up to seven years."
You don’t have to navigate your finances alone. Join John’s free Facebook group called, The SuperSavers Club.
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