You’ve heard this before. If you find yourself in a hole stop digging!! And if you want to get out, start building up! Improving your credit is easy and straightforward. It’s the following through part that most of us have trouble with. But here is a little trick: always keep your end goals in mind. You want an excellent credit score, financial strength, confidence and peace of mind. Having a clear picture of what you want to achieve will help you stay motivated and on the right track. So follow the steps outlined below. It’s the proven way to improve your credit score. - Order your credit report. It might look better or worse than you expect it to be. But at least once you have it you know exactly where you stand and can decide what steps you need to take next.
- Dispute any incorrect negative items on your report. See if any positive items are missing from your report and work with your creditors to have them added to your record.
- Use your existing credit wisely. Pay all your bills on time. This is the factor that affects your credit score the most. It accounts for 35% of your score. Try to use no more than 35% of your credit limit on each credit card you have. If possible, pay off the balance each month.
- Pace your applications for new credit. Applying for credit more than three times in a six month period lowers your credit score. This doesn’t include multiple inquiries for mortgage or a car loan in a short period of time, so shopping around in this case will not hurt your credit score.
- If you need to apply for new credit do so responsibly. Never borrow more than you can afford to pay back. Make all your payments on time. For credit cards, use less than 35% of the credit limit and pay the balance off each month. For loans, borrow just a small amount. Give yourself about a year to pay it off. That way you’ll be building a strong payment history in your credit file.
These are the basic steps to improving your credit score. So what will you do? Eventually, you will have to deal with your bad credit. Why not start right now? It might seem overwhelming today, but think down a few years from now. You’ll be in control of your finances. You’ll know how to manage money wisely. You’ll learn skills that not only will help you improve your credit, they will help you start building wealth too. “Each problem has hidden in it an opportunity so powerful that it literally dwarfs the problem”. (Joseph Sugarman) Use this experience to get your life on the right track. |