5 Steps to Take to Repair Your Credit and Start Re-Building Your Credit Score
Your credit score is a reflection of your financial health. If you’re looking to purchase a car or home, or even apply for some credit cards, a low credit score can prevent you from taking those steps. That’s why taking steps to improve your credit score should be a priority.
If you’re looking to boost your credit score, here are five steps you can take:
1. Understand Your Situation and Monitor Your Credit Reports
In order to repair your credit, you have to understand and know what is affecting it. This means it’s important to check your credit reports at least once a year. Federal law allows you to access your credit reports, one from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. Checking your credit report can help you isolate any issues and help you figure out what you need to address.
2. Pay Bills on Time
Your payment history is the largest factor in your credit score. Late payments can result in penalties and may ding your credit score. Pay all of your bills on time and before the due date.
3. Get Current on Past Due Accounts
If you have any past due accounts, you should work to get them current as soon as possible. Start by calling the creditor and ask for a payment plan or other arrangements that you can manage. It’s better to make arrangements than it is to default, which could have a bigger negative impact on your credit score.
4. Reduce Your Credit Card Balances and Utilization
High credit balances with a maxed out credit card limit can drag down your credit score. In order to improve your credit score, you should keep your credit utilization ratio under 30%. That means if your credit card limit is $1,000, you should strive to keep your balance under $300.
5. Apply for New Credit Carefully
A single application for a loan or credit card, can affect your credit score in the short-term. New accounts that are opened up can lower your credit score. If you’re looking to apply for new credit, be wise and pay close attention to your credit reports. Monitor them for any suspicious activity and ensure that your accounts were reporting correctly.
Start Building Your Credit Today
The steps discussed above can help you start repairing your credit score. While it’s not a quick solution, it can be a start to improving your credit and helping you qualify for the things you want in life. Start taking action toward improving your credit today.
