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Credit in Crisis: 5 Tips for Repairing Your Credit

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Originally posted on http://www.fox34.com/story/40252267/credit-in-crisis-5-tips-for-repairing-your-credit

 

Nothing hurts your future goals and aspirations more than bad credit.

The truth is that 40% of people who request credit for a car loan or other financial obligations face a lot of difficulty and red tape in order to get it.

So don’t do that to yourself. Check out these top five tips for repairing your credit, and never face a financial rejection again.

1. Payment Reminders

Payment reminders are your friend.

Since making credit payments on time is one of the biggest contributors to the health of your credit score, putting reminders in place will prevent you from shooting yourself in the foot and ensure your payments are submitted on time.

Check with your bank if they offer payment reminders through their online portals, and sign up for an email or text message that’ll keep reminding you when you have a payment due. You can also enroll in automatic payments through your loan providers or on your credit card, which will automatically deduct the minimum payment on your credit cards.

However, if you want to ace that credit score test, set the automatic payments for the whole amount due instead of just the minimum payment.

2. Owe Less

Okay, we’ll admit that going for paying the whole amount due might be a bit advanced if you’re just starting your perfect-credit-score operation.

So start slow and pay off as much debt as you can handle.

In order to figure out how much debt payment you can handle, you’re going to have to break out some spreadsheets (or pens, we don’t judge).

Go through your credit reports, make a list of all your accounts, and include how much debt you accumulated on each one as well as the interest rates they’re charging you.

Set up a payment schedule that will cross off the most financially painful debts— those are the ones with the highest rates—and pay the minimum payments for the other accounts.

3. Don’t Repeat History

Your payment history isn’t going anywhere.

This history is contributing around 35% to your FICO Score calculation, so it has the highest effect on improving your credit scores.

While past misdeeds like missed or late payments aren’t easily fixed, there are ways to ensure that history doesn’t repeat itself:

  • It is essential that you pay your bills on time.
  • If you missed payments, make sure that it gets paid as soon as possible and that you stay current.
  • Heads up: Paying off a collection account will not remove it from your credit report. It’ll stay there for seven years.
  • Contact your creditors as soon as possible if you feel like you won’t be able to pay your minimum payment in a timely manner.

4. Control What You Owe

Payment history can be a bit hard to manage, however, cleaning up your amounts owed is straightforward and contributes up to 30% to your FICO Score.

  • Pay off your debt instead of moving it around: credit reporting agencies can tell when you’ve simply reshuffled the debt around.
  • Keep your credit cards’ balance as low as you can make them.
  • Don’t open new credit cards that you won’t use just to increase the number of credit accounts you have.

5. New Credit Dos and Don’ts

New credit can help you boost your credit score if used correctly.

  • Do: Open new accounts like a guaranteed credit card, but make sure you’re paying them off on time.
  • Don’t: Rate shop for a loan within a short period of time. Stretch that time period to avoid multiple hard hits on your credit scores.
  • Do: Request your own credit report. Just make sure that you’re ordering it from the credit reporting agency itself, or another agency that is authorized to share your score with consumers.

Ready to Start Repairing Your Credit?

We sure hope so!

Now that you have these top five tips for repairing your credit, you’re good to go and conquer all bad credit.

And if you want to know more about protecting your money, make sure you check out our business news daily.

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