How to Begin the Process of Rebuilding your Credit Rating
If you have a damaged credit score from past problems or indiscretions, don’t despair. There are ways in which you can work to rebuild your credit rating so that you can look forward to a more positive financial future. Below are initial tips that will get your credit on the road to a positive credit score.
- Order a copy of your credit report. Hiding from your credit problems will not make them go away. Therefore, ordering a copy of your credit report from all three credit reporting agencies is an excellent, first step in taking accountability for your past credit mistakes. It is also the best way to simply see where you are and to leave no credit blunders left unturned, so to speak.
- Call your creditors. There is no better way to address your credit problems than to simply contact your creditors. Most creditors will be more than happy to work with you to find easier repayment terms so that you can begin righting your credit wrongs.
- Pay off your existing debt to lower your debt-to-income ratio. Repairing your credit is an important step, but lowering your debt-to-income ratio is also important. It is therefore extremely important to develop a game plan to pay off your existing debt, and to stick to it!
- Do not apply for any new credit. Instead of incurring more debt, avoid taking out any new credit cards, personal loans or auto loans during this time. Instead, focus all your attention on your existing debt and how you can pay it off.
- Don’t ignore other types of monthly bills. It’s often the bills we don’t think about that have the biggest impact on our credit scores. Water bills, electric bills, phone bills and gas bills are just some of the monthly bills we all pay. But many of use fail to recognize that not paying these bills in full or on time can have an adverse effect on our credit. Bottom line: don’t forget about even the smallest of debts when it comes to rebuilding your credit score!
- Find ways to increase your payments. One of the best ways to improve your credit is to reduce your debt. And a great way to make a greater impact on your debt is with larger, monthly payments. Don’t think you have extra money each month? Make a budget and stick to it! You may be surprised to find that your monthly “incidentals” are preventing you from paying off your debt!
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