You have made a few mistakes in the past and your past mistakes are beginning to catch up with you, the saying goes the best way to get out of a hole is to stop digging. This is how you have to approach your financial mistakes before doing anything to get your bad credit fix you have to stop what ever you have been doing and start afresh.

The reason you have bad credit is that you have been paying your bills late and companies and the people who do business with you feel you will continue to do this in the future. Yes you read it just right businesses and people who deal with you have lost their trust in you.

The Road To Recovery

The the best way to approach something is to sit down and pinpoint where exactly you are and where you are going wrong, this means you have to check your credit score first for you to know your starting point and how you will work towards improving this score, you can also write down the following:

  1. Your Bad Habits: What dices ions are you making that are bad and make you pay your debts or bills late, this can help you identify the things that you have to stop doing and where you have to improve in the financial decisions you are making
  2. Your Goals : What is your target credit score and what decisions can you make that can lead you to this and how long can you take to achieve this, remember you need to give yourself enough time to dig your self out of this mess do not rush it. You have heard the saying time heals wounds, approach your credit repair in the same way

I Am Ready What Next

The following things will help you improve your bad credit rating and eventually help you improve rating:

  1. Check your credit report . Your credit score is based on the information contained in your credit report. According to a 2013 Federal Trade Commission study, one in five consumers had an error on at least one of their three credit reports. In some cases the errors were bad enough to lower credit scores by 25 points or more. If you see a mistake or old item – generally seven years but sometimes longer for bankruptcies, liens and judgments – contact Equifax, Experian, or TransUnion. Each of the credit bureaus has a process for correcting errors and out-of-date items.
  2. Create a budget. To improve your credit standing you must know what you are spending to avoid racking up debt. The only way to do this is with a budget that tracks income and expenses. Look for small savings – they add up. I recommend using a budgeting tool for this
  3. Make all payments on time and in full. This is the gold standard for good credit. Develop the habit of making bill payments on time. This will allow you to avoid late fees and other needless costs, as well as blemishes on your credit report.
  4. Save. You must have money available for emergencies. Set aside cash every week or pay period. As a start, make sure you have at least $400 in savings. You must also have cash to buy real estate, not only for a down payment but also for closing costs.
  5. Use the UltraFICO and Experian Boost programs. These programs track the movement of cash in your bank account and in many cases your score may go up. “For consumers with a score below 680, 75 percent saw an improvement in their credit score,” says Experian. Adds Fair Isaac, “seven out of 10 consumers in the U.S. who exhibit sound financial behavior in their checking and savings accounts see an UltraFICO Score that is higher than their traditional FICO Score.”
  6. Be careful about closing credit cards. A closed credit card can lower your credit score. The reason? Closing a card causes your available credit to drop, reducing your borrowing power and, more importantly, your credit-utilization ratio (a measure of how much credit you have used relative to your total credit availability.)
  7. Time counts. The sooner you take control of your finances the more likely that your credit scores will rise.

 

Get Help Building Credit

If you’re having trouble getting approved for a credit card or loan on your own, you can build credit history with the help of others or with a secured account. Try these strategies:

Become unauthorized user on someone else’s account.

Work with a cosigner who has good credit. When you have a cosigner for a loan or credit card, the lender also considers them jointly responsible for the debt.

Open a secured account. With a secured credit card account, you place cash in an account and the card issuer allows you to borrow up to a certain percentage of the money.

How to Maintain a Good Credit Score

Once you’ve done the hard work to fix a bad credit score, keeping up the momentum is the next step. That means diligently paying all bills on time, maintaining low balances on credit cards and only seeking out new credit when necessary.

Length of credit history accounts for 15% of a FICO® Score, so you may also want to keep old accounts open to maintain a long average credit history. That could mean putting a small charge on your oldest card occasionally, and paying it off right away. If a card has a high annual fee and you’re no longer using it, weigh the potential tradeoffs of a shorter credit history with the money you could save.

Credit mix, or the range of credit types you have in your name, makes up 10% of a FICO® Score. You don’t need to take out a new loan merely to diversify your credit mix. But dependably managing a credit card is one of the most effective ways to maintain a good credit score. So if you haven’t opened your own credit card in the past, consider applying for a secured credit card, which will require a deposit that typically also becomes your credit limit. Making small charges and paying them off each month can help improve your score, and may make you eligible for a traditional, unsecured card down the line.

If you take these steps and still find yourself struggling, getting help may allow you to get back on track. An approved credit counseling agency can help you create a plan to better manage your finances and pay down debt. You can find a state-by-state list of approved credit counseling agencies from the U.S. Department of Justice to make sure you’re working with a legitimate agency.

Debt consolidation may be another option if you’re struggling with a lot of credit card debt. A debt consolidation loan allows you to roll multiple high interest debts into a single payment, usually at a lower interest rate and giving you just one payment to keep track of.

Be wary of any organization that promises to repair your credit with little or no time or effort, or that claims it can repair your credit for a fee. Improving your credit status takes time. Ultimately, there’s nothing a credit repair company does that you can’t do yourself with time and effort.

Dont Look Back

After it is all said and done this will all come down to you, if you are willing to improve your credit rating you will do it and it will take an effort to pay your bills on time and spend less on things you do not need and also putting money aside for rainy days. The power is in your hands and only you can do it for yourself, good luck on your journey and do not look back. if you found this helpful or there is something i have left out please do put it on the comment section

Innoe

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8 Responses

  1. I’ve been through what you’re talking about. I went from having great credit to losing my job and my credit being destroyed. I agree with the steps you’ve outlined and I would add… get organized first. Make a spreadsheet of each debt. I use the snowball method by Dave Ramsey. You also mentioned becoming an authorized user on someone who has good credit. This is something I found out about a couple of year ago and I have wanted to do but haven’t yet. I like it because they don’t even have to give you a card and you don’t have to actually charge money on anything. This way it’s easier to approach someone and ask if you can become an authorized user because you won’t be adding any debt to them. So I still think that is something big and worth looking into. Thanks for the great reminders!

  2. Hi

    You have really come up with plenty of useful tips into improving your credit score, as you often punished for some small error you did in the finance in the past. It is amazing that if you miss one payment how much it can impact on your record. I think building trust can be hard but it is possible. I always say it is difficult to get a loan or mortgage if you do not have a history to make a decision, as you have hardly  taken a loan in the past. I think that is more difficult. I  wish they were more forthcoming with how the credit score is calculated. 

    Thank you

    Antonio

  3. The most common mistake I see people doing with credit cards is that they don’t pay the amount in full. In fact banks count on this to charge you extra fee and this is how they make money out of these. Banks hate good paying consumers as they don’t make anything this way. 

    Of course now it seems that most have changed that and charge a yearly fee which is rather small for a whole year so if you know how to use a credit card smartly it can be an amazing tool. You just need to keep an eye on your credit limit also. Because it’s so easy to get carried away…

  4. I had experience at a certain phase and discovered something shocking. That If you miss a payment by 30 days or more, call the creditor immediately. Arrange to pay up if you can and ask if the creditor will consider no longer reporting the missed payment to the credit bureaus. Thank you so much for the effort put into creating this article

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