Repairing And Rebuilding Your Credit In 10 Simple Steps
Check Your Report
Whether your credit is already damaged, or you are trying to avoid it getting damaged, one thing every person should do is regularly check their credit report for errors. Unfortunately most people found out about errors after they apply for something. For this reason alone, being hyper-vigilant about checking your credit report has become a cultural imperative. Take advantage of the “free annual report” available on line (www.freecreditreport.com).
Services that Send Alerts
Almost no one is going to help you keep your credit score as high as possible, as way, way, way too much money is made on those with less-than-perfect scores. It is a battle, and if you don’t like to pay any more than you have to, then you need to check your report perhaps even once a month. There are an absolute plethora of services that will send you alerts when something new has been added to your credit, like “All Clear ID (www.allclearid.com).
Make Automatic Bill Payments
We all get busy, staying on top of bill payment dates is not always easy. Go to your credit card company website and set yourself up so your bill is automatically paid.
Keep your balances below your credit limit. This helps your overall score, and it sets funds aside for an emergency.
There is no need to be upset about missing a payment. You can’t change the fact, so it is a good idea just to move on, and try to make sure that does not happen again.
If you have high balances, you should pay your card early. This will improve the “Amounts Owed” part of your FICO score.
Balance Transfer Checks
It is so very tempting to accept one of those checks, and pay off a high-interest card. This, however, is not a good idea. FICO alarm bells will go off, and this will serve to hamper your score rather than make it better. It sort of looks like you are robbing Peter to Pay Paul, as it were. FICO is onto our activities, and they will not look kindly upon using those checks to pay down higher-interest cards.
Do Not Close Accounts
If you are not using an account, do not close it. This will harm your FICO score in 2 ways: first it will reduce your amount of available credit and second, it will not remove a bad payment report. If, however, you want to close an account, just for the sake of closing one, you should always close a newer one so your credit line history is not harmed.
Remember when you first get your new card? It is so exciting, but then more and more roll in, and you stop using that old one. Well, credit card companies are now closing inactive, older accounts. You don’t want this, so even if it is a tank of gas, try using them once per month.
If you are looking for a loan, make several applications all at once, preferably within 30 days. Inquiries do hurt your score, so you want to do as many as possible, quickly, to avoid crossing a FICO-score refresh cycle, which is normally 30 days.
Pay the cards that you have in a timely manner, and don’t open new accounts just to increase your available credit. Be wise and you can have a great credit score forever.