How to Fix Bad Credit

Video Transcript

"Hi, my name is Maria Enomoto from Consumer Credit Counseling Service and today we're going to know how to fix bad credit. The best thing that you need to do, the first thing that you need to do to try to fix your credit report, will need to pull your credit report. Know what information do you have there. Some people are scared about that and it's totally understandable, but the only way to fix something, is to know how much the damage is. So, you need to pull your credit report first to see what are the things that are mark as a negative item for your credit report. Usually negative are things that are not paid, so you still are carrying a balance, or that you have been behind on the payment. You have missed some payments and that also reported there. So, the first thing, and if you are able to is to pay off any balances that you may have that are delinquent. And, that includes having collections. If you know that some of your accounts have gone into collections, you will probably prefer to pay them first, because the best thing that you can do when you have a collection showing on your credit report is to paid off the balance. You need to have a zero balance there to improve your score, to improve your credit history. If you are not able to paid off, then you can probably contact the collection agency and work out a hardship program, or try to settle the account. That means, you are going to be paying less than the balance but it's going to be something that you agree with the collection agency. Of course, have everything in writing. Another thing that you can do is, limit the time that you ask for credit. Every time that we ask for credit, we are giving our authorization for them to pull it and it's going to be shown on your credit report that you have applied for something. So many applications, so many request of your credit report, not by yourself, but by a third party can affect your credit report or score too. Another thing that you need to consider is, to work a budget to know how much money you will have available to work on these collections or past due amounts that you have on your credit report. If you are delinquent with one particular creditor, but this account is not in collection yet, you can probably contact the credit card company, if it's a credit card, or any company that you are delinquent with and try to work something out with them. Trying to pay this, on a different circumstances under a different term but something that you have agreed with them will help you improve your score because they're going to start reporting you that you are paying as agreed again."