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A poor credit score is a major issue that can hold you back financially in several different ways. With bad credit, you’ll have a harder time getting approved for loans, credit cards, and anything else that requires a credit check, such as a rental application. When you do manage to get a loan or credit card, you’ll likely end up with a high interest rate. If you’re dealing with bad credit, there are a few important steps you should take to turn it around.

1. Obtain Your Credit Reports

You have three credit reports: one each from Equifax, Experian, and TransUnion. The law entitles you to one credit report from each of those credit reporting agencies per year, so you should always request your reports annually.

You may be wondering – why request your credit reports if you already know you have a bad score? There’s no guarantee that the information on those reports is entirely accurate. Go through each credit report yourself and make note of any errors you find.

2. Dispute Any Credit Report Errors

If you do end up finding an error on one of your credit reports, there are two ways you can handle it. You can contact both the party that provided that incorrect information and the credit reporting agency to dispute the error, or you can get in touch with a credit repair company to dispute the error on your behalf. A credit repair company will charge a fee for the service, usually after they have successfully had the error removed from your report.

Obviously, the cheapest solution is to handle any disputes yourself. Keep in mind though that the dispute process can be time consuming, and it’s not always easy to deal with creditors. If you don’t want to deal with the hassle, it may be in your best interest to contact a credit repair company.

3. Pay Your Bills On Time

Late payments ding your credit, and if you habitually pay late or miss payments, those dings are going to add up and leave you with a bad score. With all the automatic payment options available through service providers and banks, it’s not difficult to make sure your payments arrive on time.

If it’s an issue with your cash flow, set up a budget so you know exactly how much money you have and your total bills for each month. Can’t afford your bills? Then it’s time to cut back on any unnecessary expenses.

Late and missed payments are one of the most preventable black marks on your credit report, so make a commitment to paying on time every month.

4. Lower Your Credit Utilization

Your credit utilization is the amount of your total available credit that you’re using. For example, if all your credit cards have a combined limit of $10,000 and you have combined balances of $6,000, then your credit utilization is 60 percent.

It’s best to avoid carrying around balances on your credit cards so you don’t incur interest charges. However, just carrying around a balance won’t negatively impact your score. It’s when your credit utilization climbs over 30 percent that your score starts to suffer. If you’ve racked up high balances on your credit cards, start by paying them down to below that 30 percent mark.

5. Consider Debt Consolidation

If you have a high amount of credit card debt, then you may want to try applying for a debt consolidation loan. Then, you’re able to pay off your credit card debt using the loan. You may be able to secure a loan with a lower interest rate than your credit cards, so you’ll end up paying less in interest. More importantly, loans don’t have the same negative effect on your credit score as credit card debt does. By switching your debt from credit card debt to a loan, your score will likely improve. It’s preferable to simply pay off your credit card debt, but if you can’t do so in a short period of time, a debt consolidation loan is a good alternative.

Repairing your credit requires financial discipline and an effective, realistic game plan. Follow the right strategy and you can expect a boost in your credit score within a few months.