Credit Repair Tips
During times of financial stress, perhaps the hardest thing we can do is try to not think about money. During times of financial stress, thinking about money may be the thing we dread the most but do obsessively. But how to stop? Face it. When money woes plague us, money worries haunt us.
Most of us didn’t end up in financial distress overnight and it will take us a while to begin to feel some relief. To speed up the process and, hopefully, relieve a little of the stress along the way, consider these credit repair tips:
- Know your credit score. Each of the three major credit reporting agencies assigns a score to each American consumer. You’ll probably have to purchase this information but it’s an investment you won’t want to put off.
- Understand your credit rating. Credit scores are based on credit ratings. These same three companies rate your credit history in order to assign a score. The people with the busiest history of borrowing money and repaying it properly earn the highest scores. You can get a free credit report from each of these companies simply by asking. Every American consumer is entitled, by law, to one free report each year from each company.
- Compare your personal income to your personal household expenses. For the best credit rating, keep payments on all credit accounts (student loans, car payments, credit and gasoline cards, department stores, etc.) to no more than 15% of your after-tax income. After-tax income is the same as the amount of money you take home in each paycheck.
- Make all monthly payments in full and on time. This includes your rent or mortgage, all utility bills, and all payments on any account that is subject to a monthly repayment schedule, including student loans, credit cards, cable TV, etc.
- Avoid late fees and penalties at all costs. Each and every one of them lowers your credit score and robs you of much-needed cash.
- Don’t cancel unused credit cards. Don’t use them, unless it’s absolutely necessary, but don’t cancel them, either, especially if they’re associated with accounts you’ve had active for a long period of time. Canceling them reduces your overall available line of credit, which looks to credit reporting bureaus as a reduction in credit worthiness. Your score will drop.
- Don’t apply for any new accounts or services you can do without. Each time you submit an application, a credit check is done. The more credit checks you initiate, the lower your credit score.
- Don’t move and don’t change jobs. Stability is crucial to establishing a good credit rating. Two years or more at one residence address or on the same job is important to earning a higher credit score.
Put these credit repair tips to work to improve your financial outlook. They won’t put an end to your obsessive thinking about money but it may help you think and act more constructively until a better credit rating can be achieved.