Having trouble paying your bills on time? Millions of Americans are woefully behind on credit card payments, utility or medical bills, even parking tickets and may not understand the devastating effect on late payments or not paying at all can have on their credit. A study released in late July by the Urban Institute found that 35 percent of Americans have debt that has gone into collection—and one out of 20 have debt that is at least 30 days past due.
Paying even a month late on your credit card bill can hurt your credit score. Failing to make a payment altogether—even just a library fine—has a much more adverse impact. Having a debt go into collections will stay on your credit report for up to seven years. Yet, many consumers may not be aware of late payments and unpaid debts until they check their credit report. That's the first step in fixing your credit. Here are three steps to help you repair your credit score.
Check your credit report – for free!
Go to www.annualcreditreport.com to request a free copy of your credit report from each of the three major credit bureaus: Equifax, Experian and TransUnion. Your credit report contains the information that is used to calculate your score. So you want to make sure there are no errors, especially late payments that listed incorrectly
Find out your credit score – for free!
Your FICO score is the most common credit score that lenders use to decide whether to offer you credit card, private student loan, car loan or mortgage—and at what rate. A few credit card companies—Discover, Barclaycard US, and First National Bank—now provide FICO scores for free to their customers on their monthly statements. If you're in college or graduate school, Sallie Mae will also start providing free FICO scores quarterly to students with a Smart Option student loan disbursed in the 2014-2015 school year.
You can also get free credit scores from Quizzle.com, Credit.com and CreditKarma.com—which may draw on your credit information from one or more of the credit bureaus and also offer resources to help you improve your score.