Credit repair in 20 simple tips
Maintaining a great credit score can be a very important factor in leading a successful and stress free lifestyle. A low credit score can hurt your chances of obtaining everyday necessities like bank accounts, insurance and even a job. A high credit score, on the other hand, can reflect good credit management, and ultimately show others that you lead a responsible life. If you are encountering difficulties in dealing with financial institutions or other businesses because of your bad credit, now is the perfect time to restore your credit.
Restoring your credit is not easy, but with patience and perseverance, it is possible.
Here are the top 20 ways that will help you in restoring your credit:
- Prepare a list of your credit-card debt: the open accounts, the balance on each account, and the interest rate on each account. Start paying on the account with the highest interest rate, then continue to pay the monthly payments on the other accounts.
- Pay your bills on time. Mark your calendar so you won’t forget your deadlines. Paying late can hurt your credit rating.
- Make sure that you pay at least the minimum monthly payments. This will show that you are responsible in meeting your payments and will boost your credit score.
- Consider using your savings (if you have any) to pay some of your bills. This will help in offsetting the high interest rates.
- Prepare an itemized description of your budget. It must be realistic. Include all kinds of expenses.
- Use only one or two credit cards and cancel the others. This will show that you are trying to better manage your credits.
- Your open credit card accounts must have available credit. This will improve your credit score.
- Get a copy of your credit report from the three major credit-reporting agencies: Equifax, Experian, and TransUnion. You should do this at least once a year. You can order a free credit report at www.AnnualCreditReport.com. The credit report is very important because it shows your credit management in the past. Your current debt and the amount of debt you have repaid will show in your credit report.
- Review your credit report for errors. If you find erroneous items in your report, you need to dispute these errors on the credit agencies. Some errors you may find are debts that are made by somebody else or closed accounts that show as open.
- Organize your accounts according to the severity of the damage it would inflict in your credit score. This is important so you will know which account to prioritize.
- Refrain from using your credit card in buying perishables such as gas or food. Use your credit card only if you are sure that you will pay the amount in full once the billing statement arrives.
- Do not use your credit card in splurging for depreciables such as cars or furniture. If possible, make a large down payment for these items and then pay off the balance in the shortest time you can manage. This is important so that you won’t have to pay for high interest rates.
- Use your credit card in purchasing appreciables that increase in value, such as real estate or mortgages. Make sure, however, that you make wise investments.
- Do not open unnecessary accounts. Just because your current income is high doesn’t mean that you can afford to open new accounts. Your income might change in the future.
- Do not close accounts thinking that the accounts will be removed from your record. Sometimes closing accounts can negatively affect your credit score.
- Keep track of what you charge. This will prepare you when your billing statement arrives.
- When you receive your billing statement, pay your bill in full if possible. This is to avoid further interests in your accounts.
- Contact your creditors immediately if you’re overdue on any bills. You might be able to agree on a payment option that will allow you to pay your bills without the additional late-payment fees.
- Use cards that have the lowest interest rate. Those that do not require an annual fee are preferable. You can search the Internet for good offers.
- Seek the advice of professionals. If you need any help with restoring your credit, you can always ask for advice from accountants and attorneys. There are many ways to restore your credit on your own, but an advice from a professional who has extensive knowledge in this field can greatly help. Some of these professionals offer advice at affordable rates.