One of the most important things you can do is improve your credit score. First, you will be able to get more credit or a loan when you need it to do such things as buy a house or a car and you will be given much more attractive rates. In addition, you will feel much better about getting your financial house in order. However, when rebuilding your credit it is important to remember that it will be more of a marathon rather than a sprint and will take some time.
One of the first things you must do when working to improve your credit score is to stop using the credit that you have. Using credit unwisely is what got you into trouble in the first place, so in order to get out of trouble, you must put the credit cards away. In addition, a large part of your credit score is based on how much debt you have compared to how much available credit you have left. In order to improve this section of your credit score, you can’t keep spending.
The second thing to do is to immediately order a copy of your credit report. Each American can receive a copy of their credit report each year and you are also entitled to another free report if you are turned down for credit or live in certain states. These reports will show you exactly how much money you have on each card, where you have fallen behind and if there are any errors that may also be bringing your score down. If you do find any errors, contact the credit bureau and work to have these fixed immediately and you may see a near instant rise in your credit.
Another important aspect to repairing your credit is to pay your bills on time. Timely payments make up 35% of your overall credit score. Simply making sure that your payments, even if they are the minimum amount, are in on time can help boost your overall credit worthiness. In order to get your payments in, consider setting up automatic payments with each creditor so the money is automatically deducted every month. Many banks also use bill reminder software so you can keep track of when each payment due date is approaching. Of course, you can also write out this information on a calendar and make sure that your check is in the mail at least a week before the due date to allow for processing.
You can also improve your credit score by not spending all of the credit which you have available. By being close to your credit limit, you will have a negative effect on your overall credit score. By working to pay down some of the balances you owe, you will see an increase in your credit score. Try attacking the card with the highest APR first while still paying the minimum on the rest of your cards until that one is paid off and you move on the card with the second highest APR and do the same.
In order to improve your credit, you will also want to stop applying for new credit. Each time an inquiry is pulled on your credit, your overall score will take a negative hit. However, if you are shopping for a mortgage or a car, these credit pulls will not be counted against you.
Finally, if you need some help in getting your finances in order, there is no shame in that. Many times, good people find themselves in over their head and may need some assistance in digging their way back you. You might want to consider visiting a credit counselor. These are trained individuals who will see where your money is going and work out a plan in order for you to pay down your debt and repair your credit at the same time. However, be aware of many credit repair scams that exist and be sure to pick a company with a good reputation. You may even want to look at the Better Business Bureau to see if any complaints have been lodged against them and also ask any friends or family for a good recommendation.