Repairing bad credit is frustrating but, it comes with all sorts of repercussions if left unattended. However, with some patience, organization and responsibility you can fix it! Improving your score won’t happen overnight but if you follow these steps you will be on the path to recovery.
1) Read your credit report!
I can’t stress enough that credit documentation is often riddle with errors that you can and should have corrected. Falsely reported late payments and errors in the amounts charged are one of the more common mistakes found. If your credit report says you made payments late but you know you made those payments on time, contact the credit bureau to get those removed. The cleaner your record the better your credit score.
2) Make your payments on time for all credit lines.
Be sure to mark these dates on your calendar, set reminders on your phone or enroll in automatic payments. Making credit card payments on time is an important step to improving your credit score. If you only use your credit card for things you know for sure you can pay off then your credit will benefit from use of the credit card.
3) Set up a budget that will allow you to reduce your debt to credit ratio.
Look at your income vs expenses and debt to derive a re-payment plan that will help you lower your debt to credit ratio to at least 30%. This is one of the harder steps, but the lower your debt amounts are the more improvement your score will see. Set aside as much money as you can from each paycheck that will go towards reducing debt. Financial experts recommend the snowball method, paying off the lowest amount of debt and continuing to pay the same amount towards other debts once the smaller ones are paid off.
4) Use your credit cards in moderation.
Credit lines that have had good standing in the past but use has been discontinued, the lender may stop reporting the good credit to the credit bureaus. This somewhat counteracts step 3 of paying off debt but if you don’t use your credit your score can actually go down. For keeping your credit active a good rule of thumb is buying lunch or dinner once or twice a month and paying it off be fore the end of the cycle.
5) Get a secured credit card.
If you have trouble limiting your spending, a secured credit card can force you to stop overspending. This type of card typically requires you pay a certain amount as a down payment and the amount you paid is your spending limit. This means you will always make your payments and using this type of credit card still works to improve your credit history.
Remember credit repair can take time so be patient; your credit score will improve once your credit history has improved and that could take some time. If you are looking to own a home and are on the road to repairing your credit search our database of rent to own homes to find the perfect home that you can work toward owning while you fix your credit!