Hitting a point in life where you realize you need to repair your credit is a scary moment. We work all our lives and this one little score can make or break our futures. Luckily you do have ways to work on rebuilding your credit and getting back on track. In this article, we will look at some of the top ways to bring your credit score back to life.
Remember that even asking for credit has a negative impact on your FICO score. One or two inquiries are not that big of a deal, but keep in mind that these inquiries stay on your credit for 2 years and they will add up. Don't apply for cards or loans just to see if you'd get approved.
Getting your credit score up is easily accomplished by using a credit card to pay all of your bills but automatically deducting the full amount of your card from your checking account at the end of each month. The more you use your card, the more your credit score is affected, and setting up auto-pay with your bank prevents you from missing a bill payment or increasing your debt.
Keep your credit card balances low. having a high credit limit on your card can seem like you've won the lottery, but using that entire limit will lower your score. Try to keep balances at a 50% maximum. 30% is more of a prime target. By doing this you are showing that you can handle your credit well, and that you don't need every dollar that has been extended to you.
Give your cards a bit of diversity. Have a credit account from three different umbrella companies. For example, having a Visa, MasterCard and Discover, is great. Having three different MasterCard's is not as good. These companies all report to credit bureaus differently and have different lending practices, so lenders want to see a variety when looking at your report.
To build up a good credit score, keep your oldest credit card active. Having a payment history that goes back a few years will definitely improve your score. Work with this institution to establish a good interest rate. Apply for new cards if you need to, but make sure you keep using your oldest card.
There exist several non-profit agencies that can help you repair your credit. Instead of reducing the amount you owe (which gets reported negatively) you can work with these organizations who will liaise with the debt collectors to reduce the interest rate, which in effect reduces the amount owed.
An important tip to consider when working to repair your credit is the fact that you should set your sights high when it comes to buying a house. At the bare minimum, you should work to attain a 700 FICO score before applying for loans. The money you will save by having a higher credit score will result in thousands and thousands of dollars in savings.
Do not try something that you do not know is legal or illegal. Scams abound on the internet that show you how to change your credit file. Of course, this highly illegal, and it will cause you even more problems, because it will not go unnoticed. The legal consequences are expensive, and you might be sentenced to jail.
As you can see, rebuilding your credit isn't going to happen overnight. It requires effort and dedication to the task. Our credit scores are used in the decision making processes that affect so many aspects of our lives. Using these tips provided will lay the groundwork you need to be able to have those decisions start going your way.