The current economic situation has many people scrambling to find some safety and security in their finances.
Bad credit habits and low credit scores are rearing their ugly heads and causing many consumers to miss out on low interests or other lending opportunities.
The good news is that it is never too late (or too soon) to start working to repair your credit.
1.
The first thing you need to do is to get a complete picture of your financial situation.
Write down all of the different amounts that you owe, the amount of your monthly payments and also the amount of income that you receive (be sure to include all incomes).
2.
Set a budget for your money.
Once you know how much you owe and how much you make you will need to develop a budget to monitor the spending.
The goal is to bring in more money than you send out and a budget is a good step in that direction.
3.
Cut up your credit cards.
Some people recommend just putting them away but it can be too tempting to use them "just this once.
" Cutting them up will guarantee that you don't have access to them and commit to NOT using the numbers to purchase online.
The goal is to pay cash for all your purchases.
4.
Double up your payments.
Start with the highest interest account and pay it off.
Then take those payments and put them towards your next highest interest account.
This has been referred to the snowball payment plan because the payment snowballs (or increases) in size each time a debt is paid off.
The goal is to lower your debt to credit ratio in an effort to raise your credit score.
5.
Review your credit reports.
Make sure that your debts are correct and file any paper work to make any corrections that need to be made.
Remember that you can request one free credit report from each of the reporting agencies (Equifax, TransUnion, and Experiean) using annualcreditreport.
com.
The goal is to clear up any misreported items, old items or incorrect items on your credit history.
6.
Close out newer credit accounts first.
The age of the credit account affects your credit score.
The amount of credit you have available does as well.
The goal is to lower the amount of available credit that you have (which helps to increase your credit score) and to close newer accounts (which can lower your credit score because of their age).
7.
Keep your credit accounts active.
Even if you have filed for bankruptcy you need to re-establish your credit.
Pay your accounts on time every time (set up automatic payments if you need the assurance that it will be paid on time).
The goal is to being to create a history of good credit habits.
8.
Start saving.
Although it might not increase your actual credit score it will improve your standing in the eyes of potential lenders.
The goal is to put money in the savings account on a regular basis to prove that you will be able to make the payments if you are given the credit.
The most important thing you can do to improve your credit score is to make payments on time.
It is important to get your finances in order so that you are in a position to make all of your payments in a timely manner.