Credit Repair – Improving Your Score Over Time

One of the most important parts of your finances that you need to have is your credit record. Your credit record once established is the basis on which you receive loans and credit and affects many areas of your life. At one point in my life I was a very poor credit risk. In fact, I was turned down repeatedly for a loan in the first couple of years of employment because I didn’t have a good enough credit score. I knew that I had to start improving my credit if I wanted to get a loan for a car or even finance my first house.

How To Repair Your Credit Scores

Believe it or not, improving your credit scores is not very difficult if you start paying your bills religiously on time. While it’s beneficial to make all of your payments on time, it’s even more important to pay your bills on time in order to build your credit. Unfortunately, most people are in to much debt by the time they decide to make only the minimum payments on their credit cards. Therefore, your score goes down until the credit cards are paid off and you don’t have enough available credit left to use on creating you credit score anymore.

Mistakes To Avoid

One of the biggest mistakes that people who know they are in debt make is thinking that their situation will improve on its own. Credit scores don’t work like they used to, and time will not fix bad credit. If you’re in debt and have high credit card and other bills, it’s best to start making a plan to start paying everything off so that you can start increasing your score. Here is a simple guide to follow.

1. Stop buying stuff that you want but you don’t need. Learn to prioritize the money you spend on groceries, child care, rent and other important things. You need to live within your means, and if you can’t afford something on your own, then you shouldn’t make a purchase. This will also help you pay off debts faster.

2. Stop paying only the minimum payments on your debts. Instead of paying $50 per month toward your credit card minimum, why not pay $100 per month and pay off everything you owe in that amount of time? You can increase your credit score by doing this. Additionally, educating yourself about debt will help you make better financial decisions when the time comes.

3. Stop paying late fees on your credit cards. Unfortunately, late fees have been around forever but it hasn’t shown any real significant damaging effects. There have been reports of people with hundreds of thousands of dollars of debt paid off completely with late fees. Why would you risk this? Lenders know that even small fees from late payments hurt your score. Again, if you have more than one credit card, call your lender and ask them to remove the fees. Not all lenders are responsible, so make sure you call the right ones. You can also examine your credit cards to figure out which ones have late fees attached to them.

As you can see, repairing your credit score isn’t very hard. It’s just a matter of knowing what you’re doing wrong and being proactive instead of reactive. If you have past due accounts, contact the companies to get them paid off. If you’re having trouble making payments on time, you can contact your lender and see if they can work with you.

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