A good number of Americans don’t completely understand what’s involved with credit repair so they hire a firm to handle it for them. Or sometimes they bury their heads in the sand and never bother to look at their credit card debts at all. The truth is that most ways to fix your credit begin with your daily financial routines.
Paying a credit repair services company to fix credit problems may help with a lot of the legwork that needs to be done during the repair process, but there are still tips that if you incorporate into your credit habits will have you maximizing your credit scores in months.
Tip #1: Pay Bills on Time
You might think that this is fairly obvious, but you’d be surprised how many consumers will simply overlook a monthly payment. Missing just one monthly payment can lower your scores over 100 points and could stay on your credit reports for up to seven years.
Tip #2: Pay More than the Minimums
If you’re only paying the monthly minimums than you are spending more money over time because of interest rates and other fees that’ll add up. With new credit card laws, the creditor has to breakdown exactly how much you’ll be paying if you were to just pay the minimum each month versus paying it off faster. Be sure to read through your statements to see what you could be saving.
Tip #3: Keep Credit Card Balances Low
Ideally, you want to get your credit card balances below 20%. This will indicate to lenders that now you’re using credit responsibly. Maxed out cards tells them that you need that money and that you’re using your cards out of necessity, not convenience. Plus, maxed out credit cards are often what lead consumers to need debt relief.
Tip #4: Don’t Close Old Accounts
A portion of your credit score is based on the average length of your credit history. This means closing out older accounts, even if you’re not really using them, can actually hurt your credit score. Ideally you want to use these cards occasionally to make sure that the lender doesn’t close them out either.
Tip #5: Read Your Credit Reports
You can’t know if your reports are reporting negative information if you never look at them. All three major credit bureaus – TransUnion, Equifax and Experian will allow you to pull your free credit reports every 12 months at annualcreditreport.com. It’s free, so there’s no reason you shouldn’t at least be looking over them once a year.
Tip #6: Find Help if You Need It
You may not need to pay for credit repair services, these tips could boost your score to exactly where you need to be. But if you’re ever confused or overwhelmed, there are tons of online help sites and credit repair forums you can use.
Tips Only Help if You Follow Them
I know that these tips are sometimes easier said than done, but when you’re being pre-approved for loans and credit cards or you’re being offered the best interest rates in the industry you’ll be glad that you were able to maximize your credit scores. These tips usually involve a good amount of budgeting and saving, but if you’re committed to the process you should see positive results within a few months.
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