Repairing your credit score as a do-it-yourself project requires financial discipline and accurate information about your credit report. Federal law allows you to obtain your credit report information free of charge. Armed with this information you can begin to formulate a plan to make payments on your existing credit accounts and work to remove any potential errors on your credit report.
Get Your Credit Report
The Fair Credit Reporting Act allows you to request a copy of your credit report from all three major credit bureaus for free once every 12 months. Reviewing the information in your credit report can help you find errors and determine which accounts need the most attention. If you find an error on your report, federal law requires the credit bureau reporting the error to investigate the notation within 30 days of your written request. If the credit bureau determines the notation was made in error, it must be stricken from your credit report immediately.
Timely Bill Payments
Credit repair begins with making timely payments to all your debt obligations. If you have delinquent accounts, devote more money to your monthly payments for those accounts to bring the balances current. You can accomplish this by creating a monthly budget to help you visualize your spending habits. A budget also helps you determine how to distribute your finances to meet your credit repair goals. This may require some sacrifices, including fewer nights dining out or fewer trips to the movies, to bring your credit accounts current and begin repairing your credit score.
Low Revolving Balances
High revolving credit balances significantly impair your ability to secure new credit. Paying your credit card balances down is a key element in repairing your credit score. Target one card at a time by making payments designed to pay the card's balance to zero over a short period of time. Begin with the card with the highest interest rate because it's costing you the most money each month. Once the balance reaches zero, roll the payment over into the card with the next highest interest rate and continue the process until all your cards are paid off.
Smart Use of Credit
When your cards are paid off, keep the cards open and continue to use the accounts every few months. This keeps your utilization rate high and signals to creditors that you can use credit responsibility. It's important to only use each credit card to purchase what you would otherwise be able to afford with cash. This ensures you can pay the balance off each month and avoid the snowballing balances that landed you in credit trouble in the first place.
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