So you are ready to repair your credit are you? Well, credit repair is easier than one may think. You must have a solid plan in place in order to remain on track. Repair your credit puts on track to increasing borrowing power. There are many ways to put yourself back on track such as on time payments, keeping revolving debt low, length of credit, not splurging on credit and etc
On time payments
When you make payments on time it accounts for a lot on your credit report. When you make payments on time creditors see you are responsible with your money and you are potentially a good customer. There are times where making on time payments can be tough especially if you are living paycheck to paycheck. When you have a bad month it not affect your score if it happens one time. When getting back on track make sure you can the following month because your hard work can go undone. If you need to cut back in order to make a payment on time then you should after all it is only a month or a paycheck.
Keep revolving debt low
When you have credit making on time payments is not enough. Keeping revolving debt below you 33% is a rule of thumb, but you should keep it lower and not push it to the limit. An expert may advise you keep to below 30% so you have breathing room. Revolving debt should be taken seriously. If you have a choice of paying down revolving debt or eliminating something off your credit report more times than not paying down debt is priority. However, there are examples where an item in collections may be minimal and might be the better option.
Length of credit
Length of credit doesn’t account for much as far what determines your credit score, but the percentage is large enough to make a difference between a 580 and a 620 score. The best way to establish the length of your history is to apply for a credit card with a low maximum so you it is manageable to payoff. When establish your history sign up for a subscription just to keep your card active. When you have a credit card and you decide you do not want it anymore do not close your account unless you have a strategy in place. Closing accounts ruins your hard work with length of credit.
Not splurging with credit cards
Most people like to pay down debt just spend more money. When you pay down debt and run up your credit again it triggers red flags from creditors. Most people do not realize this until it is too late. If you feel the urge to splurge make sure you use half and half (a quarter credit and the rest debit). I.E If you have a credit limit of $4,100 and you paid it off but want to buy something else you should spend a quarter credit so you do not affect your score, also this relieves the upfront payment of a debit card.
There are many ways you can repair your credit. You must remember to request reports from all three bureau’s and then analyze your situation. Always seek professional advice when you need help. Good luck!