After Debt Relief Services from Colorado Bankruptcy Lawyers, Get Back to Your Life
If you’re a Denver area resident who is struggling with your debt and finding that your low credit score is negatively affecting your life, it’s time to take drastic measures towards improving your FICO credit score. As you do so, you’ll even begin to take back your life from the burdens of debt.
Fortunately, it can be quite easy to improve your credit score, although it does take time to achieve. Follow these simple tips to get back on track with the big three credit reporting bureaus: Experian, TransUnion, and Equifax.
Here’s how to quickly improve your credit score:
- Develop a plan for your debt.
- Make on-time payments and micropayments to your creditors.
- Decrease your credit utilization ratio.
- Don’t unnecessarily open or close new accounts.
- Dispute incorrect information on your credit report.
- Talk to a debt settlement or bankruptcy attorney.
Consult a Debt Settlement Attorney or Bankruptcy Lawyer in Arvada or Aurora
If you have credit problems, you need to determine whether your problems are the result that you have debt you simply cannot pay in full or not. As a result, you should strive to pay off your unsecured debt (i.e., credit cards, medical bills) within 3 to 5 years. If you cannot do this, you should consider debt relief and getting out of some or all of your debt as the first step toward improving your credit. To do this, you should contact a debt-settlement attorney. or bankruptcy lawyer near you. You should look for one with years of experience in helping their clients find freedom from the chains of debt.
Debt settlement means your attorney works with your creditors to lower the balances of money you owe, so that you can more easily afford to pay them off. Skilled attorneys can often significantly reduce the amount you owe, which will save you quite a bit of money over time.
Filing for bankruptcy is a legal process to get out of certain kinds of debt. The majority of people who complete bankruptcy proceedings keep everything they own, and end up paying little to nothing to the creditors in the process. There are multiple “chapters” of bankruptcy you can file, and it takes a professional to determine which one will best benefit you and your situation. A bankruptcy lawyer can help you determine if bankruptcy is right for you.
While it may seem counterintuitive to file to settle debt or file bankruptcy to improve your credit, these measures to get out of debt are often necessary to start improving your credit. Once you’ve dealt with your bad debt, you should take the steps outlined below to quickly improve your credit.
Choose a Top Bankruptcy Attorney in Colorado To Help You
If you’d like more information on how you can settle your debt or whether you should file for bankruptcy, contact Wink and Wink, Denver area bankruptcy, debt settlement, and tax resolution attorneys.
You’ll receive a free consultation, in which a lawyer will review your situation, give you honest answers, and advise you on the most cost-effective way for you to seek relief from your debt. Call Wink and Wink at 303-410-1720, or complete the online consultation request form to get started.
Make On-Time Payments and Micropayments to Your Creditors to Increase Your Credit Score
On-time payments to creditors make up to 35 percent of a FICO Score calculation, which is why making on-time payments is so important if you’re looking to raise your credit score. On-time payments include those to utility companies, your landlord, credit card companies, and more. All of these entities can report your nonpayment to credit bureaus.
Payments that are even a few days late, known as delinquent payments, can quickly and negatively affect your credit. If you’ve missed payments in the past, your goal now is to stay current. Eventually, the effects of past late payments will be overridden by good payment patterns, but it isn’t immediate.
You might consider making micropayments to certain creditors, especially credit cards. Micropayment strategy dictates that you make a payment once every two weeks toward your credit card, either half of the minimum payment, or a larger amount. The extra monthly payment from the payment plan not only lets you pay down your debt at a more rapid pace, but it also builds a history of on-time payments.
Setting a reminder on your smartphone or manually writing down bill due dates can help you stay on track with your payments, if you’re prone to forgetting. Use the virtual assistant on your phone to record recurring reminders, or purchase a wall calendar and hang it somewhere in full view.
Decrease Your Credit Utilization Ratio
Add up your total credit card balances, and divide that amount by your total credit limit. In the resulting decimal, move the decimal over to the right two positions. The number you end up with is called your credit utilization ratio, and it’s a percentage often used to calculate your credit score. People with the best credit tend to have very low credit utilization ratios, and lenders prefer to see them at 30 percent or less.
For example, if you keep a balance of $1,000, and your total credit limit across all your cards is $10,000, your utilization ratio is just 10 percent.
$1,000/$10,000 = .10
.10 = 10%
To achieve a low credit utilization ratio, you should work to keep your credit card balances low. You can do this by only using your credit card for necessary purchases, like gas or groceries, and immediately paying off the charges.
If you already are working to pay down an uncomfortably large credit card balance in 3 to 5 years, that could not be settled, consistent payments and never adding to your balance can help you lower your credit utilization ratio.
Be Cautious About Opening and Closing New Accounts As You Settle Debts
Some so-called “debt-relief counselors” often advise people to open new accounts to get a “better credit mix.” But unnecessary credit accounts can actually come back to bite you.
Each time you apply for more credit, you create a hard inquiry on your credit report, which can actually immediately lower your credit score. And with all the available credit in your name, you may be tempted to overspend, which is how many people accumulate overpowering debt in the first place.
Similarly, if you have paid off your credit cards and are living without a credit card payment, you should leave those accounts open, especially if they are the kind without an annual fee. Closing an account can actually increase your credit utilization ratio.
For example, if you have $1,000 of debt, and your total credit limit is $10,000, your debt utilization ratio is 10 percent. But, if you close a credit card that provided you with $3,000 in credit, you now only have a credit limit of $7,000, which increases your debt utilization ratio to 14 percent. This doesn’t seem significant at these numbers, but if you’ve already accrued a large amount of debt, you’re likely to see a more dramatic increase in your ratio.
Dispute Errors on Your Credit Report
If you’re not sure why your credit score is so low, it’s time for you to take charge and request a full credit report from the big three reporting bureaus. Carefully review the information on each report, and highlight items that don’t seem to be accurate – accounts you don’t remember opening, debts you never took out, and even your personal information.
If you spot errors, it’s up to you to dispute them separately with each credit reporting agency. Check their websites to learn how they prefer you file your dispute.
In general, you will share what information you believe is incorrect, state why you are disputing the information, and request a deletion or correction of the information in the report. You should also include copies of any documents that support your position. Never send originals. Usually credit bureaus have 30 days to investigate your dispute.
You should then write a letter to the creditor responsible for the incorrect information on your report. Explain that you are disputing the information they provided to Equifax, Experian, and TransUnion, once again including copies of documents that support your position. Your creditor is then responsible for communicating with the credit bureau. Expect this to take up to 90 days to complete.
Note that it does not harm your credit for you to pull your own credit report, nor should you need to pay any money out of your own pocket to see it. You can pull your credit for free once per year at www.annualcreditreport.com.