8 Tips To Rebuild Your Credit
Having a good credit rating is absolutely critical in modern society – a low credit rating can cost you tens of thousands of dollars, or obstruct you from obtaining credit altogether. If you have poor credit IT IS possible to rebuild it, but you will need to be committed to a good plan. It will not happen overnight! Here are eight tips to help you start your own personal plan.
TIP 1: OBTAIN YOUR CURRENT CREDIT REPORT
Get your current credit report. Once you have this you can identify and fix any errors, as well as determine what you need to do to rebuild your credit. If you don’t know where you’re starting from, how will you know if your plan is working?
TIP 2: LEARN HOW TO INTERPRET YOUR CREDIT REPORT
The next step is to understand what your credit report means. Every credit-reporting agency uses a slightly different format, but they all describe the same basic information about your credit history.
TIP 3: FIX ANY ERRORS ON YOUR CREDIT REPORT
Sometimes companies make mistakes that show up on YOUR credit report. If you find an error you need to contact the creditor directly, and/or, contact the credit-reporting agency in order to investigate and fix the error. Fixing a mistake on your credit report may take time but it is well worth the effort!
TIP 4: ALWAYS PAY ON TIME
Making your credit card payments and loan payments on time accounts for approximately 35% of your credit score! It is absolutely critical that you make your payments on time. Even if you plan on paying the whole balance off in a few weeks, make sure you make your minimum payment when it is due, or your credit history may be affected.
TIP 5: REDUCE YOUR BALANCES
The size of your outstanding balances vs. your limits accounts for approximately 30% of your credit score! Do everything you can do to reduce your balances.
TIP 6: KEEP OLDER CREDIT
Credit is like fine wine – the older it is, the more valuable it is. The age of your existing credit accounts for approximately 15% of your overall credit score. If you are planning on canceling your loans or credit cards, don’t payout and cancel them all – try to keep the oldest piece of credit you have.
TIP 7: DON’T BE DESPERATE
Resist the temptation to apply for too much credit! Almost every time you apply for the credit the lender will check your credit report and those credit checks will show up on that very same report for every other lender to see – this will not help your situation. Choose your creditors and lenders carefully. Remember – NOBODY can check your credit without your permission.
TIP 8: GET TWO TYPES OF CREDIT
The best way to establish a good repayment history to future lenders is to obtain two forms for credit: revolving credit (a credit card) and non-revolving credit (a loan). Credit cards alone typically do not have high enough credit limits to make a significant difference – and you need to show future lenders you can manage a significant amount of credit.
Courtesy: Homeguard Funding Ltd.