Helpful Tips For Rebuilding Your Credit

07
February

When it comes to credit, few things have a more direct impact on so many areas of life. When a person has good credit, they have the purchasing power to buy a new home or car, open credit card accounts or pay for a dream vacation. Good credit is the reward for responsible handling of your finances.

Similarly, bad credit is the result of irresponsible financial behavior. Not only can it make purchasing a new home or car very difficult, it can mean being declined to rent a home, being charged higher interest rates and insurance premiums, or could even cost you your dream job!

If you have good credit, guard it carefully! It can take many years to establish good credit, but a very short time to ruin it. If your credit is poor, it may seem impossible to ever reach the coveted status of having good credit, but don’t despair! It will take time, self discipline and diligence, but it can be done.

The following are some helpful tips to get you on the way to having a great credit score.

1. Review Your Credit Report

Start by reviewing your credit report. This will show you what creditors see when you apply for credit. If you find errors, contact the issuing credit bureau immediately and get them corrected. You are entitled to a free annual credit report from the three main credit bureaus:

TransUnion — http://www.transunion.com/

Equifax — http://www.equifax.com/home/en_us

Experian — http://www.experian.com/

2. Get Organized

Your payment history is one of the most significant factors in determining your credit score. Late or missed payments have a huge impact on your credit score, so be sure to make your payments on time, and never skip them altogether. If you are having trouble making payments, contact the creditor and work out a payment plan with them. Before you call, sit down and make a list of all outstanding debts and regular monthly expenses, then create a realistic budget. Be sure that you include basics, such as utilities and food. New designer clothing or a 60 inch flat screen TV do not count as necessities!

3. Small Steps Equal Big Results

It may seem like climbing Mt. Everest when you begin, but stick with it and you will reach the summit. Start with the smallest debts first and get them paid off, then apply what you were paying on those accounts to the next balance, in addition to what you have been sending. This will help you get them paid off much faster.

4. Bankruptcy Alternatives

If you have large amounts of debt, you may decide to settle with your creditors or participate in a credit counseling program. If you choose debt settlement, you can contact creditors directly, or you can work with a debt settlement firm to settle your debt for less than what you owe. Credit counseling requires full repayment of debts through a credit counseling firm, but has less impact on your credit score once repayment of debts is complete.

5. Keep Balances Low

If you have credit cards, pay them off monthly when possible. If you must carry a balance, keep it below 30 percent of the credit limit. Also, pay more than the minimum payment when possible.

6. Get A New Start With New Credit

Opening a new credit account and maintaining a stellar payment history will go a long way to improving your credit score, but do not apply for more than one or two accounts at a time. Multiple inquiries within a short time will lower your credit score. You should always use your cards sparingly, charging only what you can afford to pay off when the statement arrives.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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