Learn About Credit Repair Options

If you are one of the many Americans who have low credit, you have several options for improving your credit history and score. Even though improving your credit can be a long-term process, some of the steps available to you will let you start seeing progress relatively quickly.

Whether your score is being affected by too much debt, mistakes in your credit history or a lack of understanding about credit, the sections below will help point you in the right direction.

Check Your Credit Score: To get a sense of how your credit is doing, it is a good idea to check your credit score, as long as you understand one thing: Your credit score and your credit report are not the same thing.

Your credit report contains a history of all the credit accounts you have ever opened in your life. It shows the status of each account, as well as credit inquiries you have authorized and detailed information about your payment history.

On the other hand, your credit score is a three-digit number that companies calculate based on your credit report. Different companies use different formulas, which is why your credit score can be slightly different depending on where you check it. Overall, though, your credit score is a good indicator of how lenders view your credit, so it is a good place to start.

Check Your Credit History: After you understand your credit score and what kind of factors affect it, you need to order a copy of your credit report. Your credit report will not have a score on it. It will just have your credit history and information about your credit accounts.

Each of the three major credit bureaus (Experian, Equifax and TransUnion) is required to give you one free copy of your credit report each year. When you order your report, look through it carefully to see if there is any missing or incorrect information. Unfortunately, errors on credit reports are relatively common, so correcting them can be a quick way to bump up your credit.

Credit Counseling Programs: If you need to improve your credit quickly in order to make a big purchase, credit counseling is a great place to start. Many credit counseling programs are offered by nonprofit organizations.

They focus on helping you understand how credit works and giving you the tools you need to take control of your finances. Credit counseling programs will help you develop strategies to manage debt, build a budget and more.

Debt Consolidation: Consolidating your debt might be a good long-term plan to improve your credit depending on how you use this strategy. When you consolidate your debt, you take out one main loan to pay off several smaller loans. The loan is spread out over a longer period of time, allowing you to have lower monthly payments. This means you end up paying more in the long-run, but your month-to-month payments are smaller and more manageable.

Initially, taking out a new loan will negatively impact your credit score. However, your score will go up in the long-run as long as you make your payments on time and do not continue to rack up debt on the credit lines that you just paid off.