It’s easy to dismiss someone with bad credit as ‘irresponsible’ or a ‘deadbeat’ but the reality is that bad credit can, and does, happen to good people. All it takes is one long term illness, an unexpected repair bill, or lost time at work and you may well find yourself in the same situation. Finding good methods of credit history repair can also be fairly easy, you just have to know what to do, and what not to do.
Many people will tell you to cut up your credit cards and if you find that you just don’t have the discipline to have available balances on your cards and not use it, this may be a good option for you. Ultimately you want your financial situation to be under control and that’s as important, or even more important, as worrying about your credit score.
You see, one factor in your credit score is the ratio of available credit to your credit limit. That means that if you have one credit card that has a $1,500 limit and you only have a $200 balance on that card you still have $1,300 available credit. That will reflect positively in your overall credit score. On the other hand if you had that same $1,500 limit on your card and you owe $1,500 you are maxed out and that does not reflect positively on your score.
If you close an account it can actually hurt your score since you will not have the same ratio of available credit. Still, that is a small price to pay if you simply aren’t able to resist the temptation to use the card.
Another thing you have to get in the habit of doing is to check your credit reports at least yearly. Make sure you get one from each of the three major credit bureaus: Experian, Equifax, and Trans Union. Don’t assume that the information will be the same on each one, it won’t be. If you discover a mistake contact that bureau immediately in writing with any documentation you need to back up your claim that a mistake has been made. The credit bureau has to make the corrections to your credit report within 30 days which can result in an almost immediate boost in your credit score.
Since it can often take much more than 30 days to get a desirable credit score you should start now. Don’t wait until a few months before you want to apply for that new car loan or a new mortgage. If you go into your local bank with a strong credit score you will not only have a much easier time of being approved, you will also qualify for much, much better interest rates which can save you big bucks over the course of the loan. It will also make your monthly payments smaller and easier to handle.
If you choose to hire someone to help you with your credit history repair just make sure that you are careful who you choose. Take time to read the fine print and find out what, if any, the charges will be to you for the help. Sometimes a loan consolidation may be a good option, sometimes not, ask questions so you can make the best decision for you.