Time to take charge of your credit score!

Has your bad credit score prevented you from getting the things you want in life? Many people see that their credit scores are dropping in this economy. There are, however, ways to improve it.  At its core, credit repair isn’t rocket science.  But its not just about paying your bills on time.  It really means learning new financial habits.   In this article, lets discuss a few things you can do to start forming good credit habits.

Your Debt To Income Ratio

A big part of your credit score is your debt to income ratio.  If you are utilizing more than 30% of your credit, your credit score is being effected.

Start by paying off credit cards with accounts 50% over your limit. You can concentrate on another card once these accounts are lowered to under half of your limit. If you have a balance that is more than 50 percent, your credit score will drop. If you can, pay the balances on your cards; if not, do your best to pay as much as possible each month.

Look Out For High Interest Cards

Do you know what the interest rate is on each of your cards?  You should make a list of your cards and concentrate on paying off the cards with the highest interest rates.

Adding Good Trade Lines To Your Credit Report

Most people concentrate on pulling lines of credit off their credit report and forget to build new healthy lines of credit. If you have a poor credit history and can’t qualify for a credit card, get a secured card. Sometimes these cards are called guaranteed approval credit cards because the account is funded by your security deposit.  Your credit limit will also match your security deposit.  The bank is safe that they will get their money back because you can’t charge more than what your credit limit is.

Secured credit cards are great credit builders because in one or two years of on time payments, the bank may make the card unsecured.  When choosing a secured credit card, make sure that it reports to at least 1 credit reporting agency.   By using a new card responsibly, your credit rating will start to increase.

Build Different Types Of Credit Lines

If you are lucky enough to have a mortgage. Make sure you make those payments on time! Even if its a high interest mortgage right now, you can always refinance once you have improved your credit. Making regular mortgage payments will also help your credit score. When you own your own home it shows that you have assets and financial stability. This is helpful in case you want to borrow money.

If you don’t own your own home, there are companies that will put your rent payments on your credit report!  This is a great way to build another line of credit.

Have You Considered Credit Counseling?

When trying to repair your credit, research any credit counselors you consider using very thoroughly. Although some credit counselors are truthful and legitimately helpful, other credit counselors are not honest and upfront with their motives. Some are simply fraudulent and are out to get your money.  Instead of working with you to bring down your debt, they work with your creditors to try to get you to pay back the maximum.  Why?  Some of them cut deals with the creditor telling them this client is considering bankruptcy (even if you aren’t) and if you want to get any money from them, you need to work with us!  And we charge a percentage of the debt owed as our fee for making sure the client continues to pay this debt.  It is smart to verify the legitimacy of credit counselors prior to getting involved with them. Get references and check the BBB rating.

Beware Of Credit Repair Scams

While there are legitimate credit repair companies, there are also a LOT of scams!  When trying to improve bad credit, beware of companies who promise that they can erase any negative, but correct items, on your credit report. Regardless of their claims, these debts will stay on your report for seven years at a minimum. Items that you can get taken off your record are those that have been reported incorrectly or unfairly.

If an action can result in imprisonment, draw the line. The Internet is rife with many scams that will go into detail about creating yourself a brand new credit file and making the old one magically disappear. Doing this is illegal, and you will be caught. Not only can legal fees add up, but you could end up in jail.

Once you set your mind to it, you can improve your credit score.  It takes time and patience.   If you don’t feel like you can do it on your own, there is no shame in asking for help!  If you have a family member who is good with keeping things organized they maybe a good person to approach about helping you create and implement your own credit repair plain.  If you do not want to get friends and family involved, then feel free to send us an email and we can make some recommendations to some legitimate credit repair and financial education companies.

Updated 9/15/18 by L. Roberts