5 Things You Can Do Now to Fix a Bad Payment History

It can be stressful when you fall behind on your credit card payments because money was tight. But when your credit score drops as a result, you need to take action. FICO uses your payment history as part of how they determine your credit score. In fact, whether you pay your bills on time accounts for 35 percent of that number. While there isn’t an overnight solution, there are ways to fix your credit score.

Try to Fix Late Payments

If you have a one-time late payment, you have a few options to make amends. You can write a goodwill letter to your creditor, explaining why you had the late payment. Take responsibility for your mistake and highlight your otherwise good history with them.

Dispute Errors

Frequently check your credit history to make sure it is accurate. If you believe the late payment was an error, you are able to dispute it. Show proof that you paid on time, and connect with your creditor. This process isn’t fast, but it’s worth your effort.

Pay Bills on Time

If you have lots of different loans — your automobile loan, mortgage, and many credit cards, for example — you may be finding it hard to pay on time. One option is to consider is debt consolidation. There are many options for individuals to wrap their payments into one, often with a lower interest rate.

Limit New Accounts

Of course, when you have a bad payment history, it’s a good idea to not use so much credit, at least until your situation has improved. Pay off specific credit cards, and then close them. And do not open new accounts without waiting a while. That’s a red flag for many lenders.

Create a Payment Plan

Start crunching numbers. If you’re really going to reverse a bad payment history, it will take some serious budgeting. Review all your credit bills. Find out the interest rates of each, and what you owe on them. Determine how much you are able to realistically pay each month, focusing on the highest interest cards first. Again, debt consolidation may be able to help you get back on track.

To learn more about debt consolidation, go to Refi.com today.