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When you analyze your credit reports you may find mistakes. In fact, in 2012 our Federal Trade Commission released a report that about 20% of us have errors in at least one of our three credit reports that are affecting our credit scores. If you find mistakes in yours
– You must dispute each mistake with each credit reporting bureau. You might find the same error in all three of your credit reports but disputing it with just one of the bureaus won't fix the others.
– You can't dispute multiple errors on one credit report with just a single letter. People often find multiple errors on one of their credit reports. If this proves true for you, you’ll need to dispute each account separately. However, if one account has multiple errors you can put them into one dispute.
– You don't need to do this alone. While you can dispute errors in your credit report yourself you may find the process to be very confusing, too tiresome or too tedious. If you feel this way you could get help from a credit repair company or a lawyer that specializes in this type of case.
3. Start a good credit history
Even though you may have been turned down for one kind of credit this doesn't mean that you can't get other types. Opening new credit can help fix your credit quicker if your credit utilization ratio or account mix is hurting your score. In fact, there are credit cards designed specifically for people who have bad credit but would like to fix it. They are called secured credit cards as they require a deposit. Once you use up that deposit you will need to add more money to your account or stop using the card. If you choose to get one of these cards, make sure that how you use it will be reported to the credit bureaus. Also, it's critical that you make your payments on time and you keep an eye on your credit utilization number.
If you're not careful there are mistakes you could make when fixing your bad credit and here's a video that reveals 10 of them.
Frequently Asked Questions about bad credit
Q. Where to get bad credit loans?
A. There are a number of sources online for bad credit loans. Three of the most popular of these are Badcreditloans.com, Peerform.com (a peer-to-peer lender) and Avant. At least one website ranks Avant as tops for secured bad credit loans.
Q. What does bad credit say about a person?
A. If you have bad credit this doesn't say that you're a bad person. What it probably says is that you may be disorganized, careless or that you’re living beyond your means. There are many famous people that have bad credit including actor Nicholas Cage, Toni Braxton. Richard Hatch and Wesley Snipes – none of which would be able to get a credit card because of their credit history.
Q. What does bad credit really cost you?
A. Having bad credit can actually cost you thousands of dollars over the course of your lifetime. The reason for this is that you'll be forced to pay high interest rates on any credit you're able to get. For example, if you get an auto loan as a subprime borrower (one with a low credit score) you'd probably pay 10% to 13% versus the 4% to 5% you’d pay if you had a good credit score.
When will bad credit go away?
As you read earlier in this article it generally takes seven years for bad credit to "age out" or go away from your credit reports. The exception to this rule is a bankruptcy, which takes 10 years to age out. However, the effect of a bankruptcy on your credit score decreases as the years go by. In other words, after five years it won't have as much of an impact on your score as it does after two years.
Q. Why is revolving credit bad?
A. There is nothing inherently bad about revolving credit such as a credit card. It only becomes bad when you fail to pay off your balance on time. This creates debt and probably high interest debt. A credit card can be a real friend if you do pay off your balance each month. It can earn you cash back, points or airline miles. It's also a way to time shift debt from now until several weeks in the future.