If you’re looking to repair your credit, I’m sure you’ve come across plenty of bombastic claims that for a minimal fee, a company can provide a quick fix to your credit woes. If only credit repair were that easy!
The truth is that long term financial security takes time and effort, and the reality is any attempts at a quick fix will likely do more harm in the long run than good. But with a solid plan and by following a few simple rules, it is possible to right the ship and stop your credit score from sinking any further. Here are some useful tips.
Check your Credit Score
Step one to repairing your credit score is to check your latest information. There are plenty of options for checking your credit score online for free. Unfortunately, not every option will provide you with accurate information that matches what your financial institutions and lenders will be using or asking for. As MyFICO reports, “For example, it's typical for a mortgage lender to check all three FICO scores when evaluating you for a loan. However, some auto lenders may only use one FICO Score to qualify you for an auto loan. Make sure you're seeing the credit scores that your lender is using to evaluate you!”
Don’t be late with your payments
Missing a deadline can be one of the most detrimental things you can do to adversely affect your credit score. Most banks now allow you to set up online reminders for all your bills so you never miss a due date, even if you are just making the minimum payment.
Reduce Your Debt
Of course, the most important thing you can be doing to solidify your financial situation is to lower the amount of debt you have. Easier said than done, I know! But the reality is that many of the quick fix credit repair services neglect this very important aspect of your financial well-being.
Start off by listing out all the money you owe, whether it’s student loans, mortgages, credit card balances, or other obligations. Then calculate which of these accounts charges the highest interest rates. Come up with a monthly budget that prioritizes these balances first.
Clarify any mistakes on your credit report
The companies that report your credit aren’t exactly known for their accuracy. Mistakes happen more often than you’d think, and that’s one of the primary reasons you’ll want to check your report regularly. If you find they’ve gotten something wrong, deal with it immediately, by contacting the agency, in writing, with supporting documentation. Here’s more information on how to dispute an inaccurate report.
Stop applying for new credit cards
Every time you apply for a new card, your credit score takes a small hit. The same thing happens when you close a credit card. (And if that seems unfair, you’re probably right!) The longer your account has been open and in good standing, the more positive an impact it has on your score. So limit the number of new accounts you open and keep the accounts you do have in good standing. If you have cards that you never use, make the occasional purchase on them and pay off the balance immediately. Your credit score will love you for it.
Credit is good, if managed responsibly
Your credit score is a measure of how well you have handled your credit in the past. The solution to having a good report isn’t to avoid debt all together. It is to manage that debt responsibly and show that you always make your payments on time. If you avoid any and all lines of credit, when you do need to take out a loan, you won’t have a track record that proves you are responsible.
Maintaining your financial stability is much like staying healthy. The best approach is to avoid getting sick all together. If you find money matters difficult to wrap your brain around, why not go to an expert. Life coaches are professionally trained to help people organize their lives in a positive, productive manner. If you’d like to learn more about what a life coach can do for you, or to schedule a consultation, contact me today.