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REPAIRING YOUR CREDIT

A low credit score or poor credit history can be damaging and difficult to overcome. But if you are properly motivated, fixing your financial mistakes is possible. Repairing your credit requires only two ingredients: time and self-control.

Your first step should be to obtain free copies of your credit reports from www.annualcreditreport.com. You should obtain free reports from all three agencies and check them for accuracy, challenging any incorrect information. If you don’t know your credit score, pay the nominal fee to receive that information as well.

Once you’ve seen the reports and understand the full situation, you need to create a plan for mending your credit. Unfortunately, there’s no way to remove negative information. All you can do is create new positive information that proves you’re a good credit risk.

1) Begin by paying off any unpaid balances. Anyone can fall behind on an obligation, but creditors want to know that you paid what you owed, even if it was much later.
2) Make sure you pay all of your current bills on time so that no new negative information is generated. Approximately one-third of your credit score is based on whether you make your payments on time.
3) Avoid maxing out your credit cards. In fact, you should try to keep your balances down to less than fifty percent of each card’s limit.
4) Open accounts only when necessary as too many accounts can hurt your credit score. Try to limit inquiries from credit card companies and don’t apply for unnecessary credit.
5) If you have paid off a credit card, wait before closing the account. Keep it open with a very small or even zero balance. Long credit histories encourage lenders to do business with you.
6) If you have too many accounts and want to close one or two, close those that have been open the shortest amount of time. Those accounts with the longest (favorable) credit history are always the ones to keep.
7) If the only credit card you have is the one with missed and late payments, open a new credit card account. If necessary, get a secured card, then demonstrate you are credit worthy by making on-time payments like clockwork.
8) Be patient and dependable. It took time, bad decisions, and bad luck to create the mess you’re in. Although these credit repair strategies take time, they will work. Once you have your credit situation under control, you’ll be amazed at how sweet it feels to be in charge of your financial destiny.