We live in tough economic times. No matter how often the media tells us the economy has bounced back, there are a lot of folks out there suffering under the crushing weight of bad credit. Having non-ideal credit can damage your ability to buy a house, a car, and even in some cases get or maintain a job. If you have suffered credit problems, you are not alone. The good news is that bad credit can be fixed. Here are a 6 steps to fix bad credit to put you back on the road to success.
Know Your Credit Report
Obtain a copy of your free credit report from annualcreditreport.com and review it carefully for errors and other problems. You might be surprised at the mistakes you find on your report: well over 2/3 of all credit reports have errors that can easily be repaired.
Get Right with Creditors
If you are behind on any payments, work hard to get current. Remember that keeping your payments current always results in a better score. Many creditors are more than willing to work with you to arrange a new payment schedule to help get you current and in good standing. For others, credit counseling agencies can help.
Secured Credit Cards
Secured credit cards are one of the best kept secrets in the industry. These cards require a security deposit, which determines the amount you can spend on the card. Once you have secured this card, make small purchases with it every month and immediately pay them down. This is a great way to rebuild credit.
When you have good enough credit, upgrade to non-secured cards and maintain the same practice: small purchases, paid off promptly.
Avoid Closing Cards
Do not close out your current credit accounts, and do not let them languish unused. Both of these create a negative impact on your report. It is unfortunate that the more credit accounts you have, the harder it may be to maintain positive credit. Still, maintain your accounts. Talk to your creditors about perhaps switching to more advantageous terms on your various cards.
Every credit inquiry you make will damage your score. Make sure that if you are shopping for a loan, you do it in a small and targeted period of time. When you get a loan, do not look for more credit for at least several months. This way you will keep your credit history strong and clean.
Stay on Top
Above all else, stay on top of your credit report and credit score. Continue to monitor your expenses and use of credit moving forward. Stay on top of all of your payments and keep your score clean and clear. This requires discipline and diligence, but many people find that when they get their score clean they can increase it to levels that far outstrip many who have always had good credit. This happens just by being responsible.
Do you have any tips or ideas on how to fix bad credit? Leave a comment below and let us hear your thoughts!