How to fix my credit is the question that quickly gets asked when a person has been turned down for a loan, been denied on a credit card application, or they are simply preparing to buy a new home, and need a mortgage. When it comes to credit repair you have several options.
One is to contact a credit repair company to find out how they can help you fix your credit.
A second option is to get started on your own working on these 10 tips below, and then consult with a company that offers credit repair services, to ensure you did not miss out on anything important.
The second option works best because as you work through these steps you will learn a great deal about your personal finances. And the more you learn, the easier it will be for you to control your spending and improve your credit.
Try Not to Move to Often
The first one may sound silly, but the more often you move from one address to another, the higher risk you appear to be from a Lender’s point of view.
Lending companies do not know you personally. They can only make judgement calls based on the information on your application and on your credit report.
If your credit score is low, and your application shows that you move every year or even sooner, even if you do it for a good reason, they may flag you as a financial risk.
Current Credit Card Balances
Using your credit cards regularly will definitely help you fix your credit, as long as you never make a late payment, not even by one day.
Always ensure you pay your credit cards off before the due date.
Most credit companies allow you to setup email reminders that include your outstanding balance, and your upcoming payment dates. The best habit is to make your payment at least five days prior to the due date.
Also, if you must carry an outstanding balance, ensure that it does not exceed 20% of your credit limit per credit card.
Use at Least Two Credit Cards
For me, a simple way to fix my credit was to ensure that I used two different credit cards responsibly.
In doing so, two different credit card companies were reporting my payment history to the credit bureaus which quickly helped me build a healthy credit history.
Apply for a Secured Credit Card
As mentioned previously, you should have at least two credit cards in your name. If you do not qualify for a new credit card you should go to your bank and apply for a secured credit card.
Using a secured credit card and paying it off each month will definitely fix your credit over time.
However, to get a secured credit card you need cash.
That cash acts as collateral. You give that cash to the credit card company in exchange for a credit card. After a year or two of using the credit card properly, the credit card company will refund the money to you, and you continue to use the credit card as always.
Your Credit History
I remember my husband saying a few years ago that he was going to close one of his credit card accounts because he no longer needed it. I quickly told him not to do that, and instead, to simply put the card somewhere safe.
Every time you close a credit card account you delete your history with them as well.
So, for example, if you opened an account when you were 18 and now at 40 you decide to close it, you will delete 22 years of good history – assuming you have a good history with them.
When it comes to fixing your credit, you want to build and maintain a long, healthy credit history. That shows lenders how financially responsible you are.
Credit Card Limits
As you work to fix your credit you will find that credit card companies are happy to offer you higher credit limits. Typically they will send you a letter once a year announcing that they have increased your limit. But once you have a credit card limit of $2,500 you should avoid increasing your credit limit.
Simply phone the credit card company and tell them you wish to maintain your existing limit.
Applying for New Credit Just for the Rewards
Sometimes it can be tempting to apply for several new credit cards all at once. You hear your friends talking about all of the rewards and airmiles they accumulate when they use a variety of credit cards, and you want to do the same.
However, when you are trying to fix your credit, applying for several new credit cards is the last thing you want to do.
Why? Because again, unfortunately, it makes you look like a financial risk.
Every time you submit a new credit card application, the credit card company does an inquiry to view your current credit score. And the fact that they did that is noted on your credit report.
One or two inquiries is not a terrible thing, but many inquires within a short period of time is. And the result is a drop in your credit score.
Create and Stick to a Household Budget
Quite often when a person is asking about how to fix my credit, what they really mean, is that their finances are less than stellar all around. An easy solution to this is to create and stick to a household budget.
A budget allows you to be in control of where you spend your money. It will instantly show you if you are going to spend more money than you earn.
And, when you see those numbers in advance, you have time to make changes and ensure you spend less.
Increase Your Savings
When you create your budget make sure you allocate money to put into your savings account every single month.
Add as much or as little as you can.
A healthy savings account shows that you are financially responsible as well.
Help Me Learn How to Fix My Credit
It is no secret that I started this blog because I myself was in financial trouble. One of the many things I have learned over the past 10 years was that to get out of trouble I needed to talk to professionals if I wanted to learn how to fix my credit. You see when your bank account is empty, and your credit needs to be fixed, you can easily get upset and confused. Instead of simply worrying about things, it is important to take action quickly. Speak to professionals like Lexington Law Firm that specialize in helping consumers with credit repair. Show them all the work you have done, based on the above steps, and find out what to do next.