Your credit score can affect where you live and how much you pay, it can affect what you drive and your car payment, it can affect a job search and it can affect your other monthly bills. A good credit score will give you freedom to do many more things with your money. Whether you use credit or not, a good credit score will help you in your life. So, how do you fix your credit score if it is currently not good?
#1 – Request your credit report. Requesting your credit report will not affect your credit score. Go online to any of the credit reporting agencies and you can request a credit score for free. You can request one each year. This is the minimum amount of time you should go before checking your credit report again. Review thoroughly each separate account and dispute any claims on there that you feel are in error. Make a plan or a credit score goal with a time-frame. Avoid expensive credit monitoring services. You can do it on your own. If you have questions, call the credit reporting agency and they will help you.
#2 – Pay bills on time. To fix your credit, now is a good time to stop paying your bills late and late fees. If you absolutely must pay them late, be careful to keep it under 30 days late. Set up automatic bill pay so you don’t miss any payments. Late fees are so expensive but if you go over the 30 days, the late payment can also effect your credit.
#3 – Reduce debt owed. Look at your bills and see if you are really living within your means. This means you can pay all of your bills each month. Start paying a little extra on the bill with the lowest balance. Is your car payment or rent way too high? Look into other options so that you can reasonably pay your bills each month. It is expensive to sell your car when you’re upside down or to terminate a lease on an apartment, but in the long run it might be better for you if you can find more affordable options.
#4 – Focus on credit cards. Credit cards make it too easy to overspend every month. Stop moving your balances around. Keep your balances low. Avoid opening new credit card accounts. Pay off your oldest debt first. But, do not close the oldest accounts. Closing old credit card accounts can actually hurt your credit. Just leave the balance at zero.
#5 – Sustain an emergency fund. Borrowing money at high interest rates when you have an emergency arise, can hurt your credit and cost you crazy amounts in interest. Always have a plan for emergencies and maintain your emergency fund first. When you use it, stop paying extra on other bills and re-establish this crucial fund. Everyone with good credit or zero debt has an account sufficient for most of their needs.
#6 – Avoid quick-fixes. Unfortunately, repairing credit takes time, years even. If someone is offering you a quick-fix, it is most likely a scam. Just like with losing weight, you must change your habits and gradually you will lose the “pounds” of debt that you are carrying.
Start somewhere small. If you are drowning in debt, start by paying off one bill. Then, move on to the next bill using the extra payment that you are now free from. Track your progress every month.
Do you need help setting up a budget or evaluating your finances? Click on my contact page. I offer free budget consultations. Coming soon, a free debt e-book to help you start the journey of improving your credit score.