Your credit is affected by a number of factors, including the amount of debt you carry in credit cards, loans and balances due. Other factors include your income, number of missed payments and other major financial situations like foreclosures, bankruptcies and repossessions. If you want to rebuild or repair your credit you need to start reducing the amount of money your owe and continue making timely bill payments.
Pay Down Credit Car Debt
One strategy to repair damaged credit is to pay off credit card balances. This is effective because it will improve your overall debt to income and debt to credit ratios. If you have a lot of extended credit--new store credit cards, major credit cards, car loans and home loans--it will adversely affect a credit score.
Stop Charging Everything
Many people charge everything and then figure they will pay down the credit card balances all at once. This can actually damage your credit score because there is the possibility that you won't pay the card's balance. Carrying a high balance on your credit card throughout the month also gives you a higher monthly average balance, which is reported to the credit reporting agencies. The faster you stop using the credit cards, the faster you can pay the balances down completely.
Check Your Credit
Checking your credit is the best way to repair a score that has erroneous information on it. You should always check your credit score and order a complete report to see what has been reported to the major credit bureaus. Sometimes, balances that have already been paid off still remain on the report. The companies that collected the balance may have simply not reported the new information, because it costs them money to make the reports. Or, there could have been an error in the information they reported. Once you have your credit report, go through each item and dispute it directly with the credit reporting agency on its website. The site will tell you how to do this. When these are removed, your credit can improve significantly.
Order Score Watch
Once your erroneous reports are removed make sure it never happens again by ordering a credit score watch. This will reduce the chance of more errors on your report. It is also a great way to repair a damaged score, because it prevents any more false bad reports from being added to your account. This will keep your score low and can negate all the positive things you do to repair the credit.
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