Steps Towards Rebuilding Your Credit
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Okay, so you’ve gotten into a little bit of a financial mess and you’re having problems paying off your bills. But, don’t feel too bad, because you’re not alone. In fact, there are more than 30 million people in the US that have problems with their credit report. And even though you may think you won’t ever be able to get credit again, that’s simply not true. However, since your credit history is so important to your life, mostly because your credit report will determine whether you can apply for a mortgage or a car loan, naturally rebuilding your credit should be at the top of your list. In fact, by following a few simple ideas, you can rebuild your credit in a relatively short amount of time. Therefore, if you’re eager to rebuild your credit, you should start with some of the basics so that you can start getting your life back on track.
The First Step to Rebuilding Credit
For those unaware of the credit scores, these constitute three digit numbers used by lenders to evaluate your credit value. Scores range from 300 to 850. In a recent survey only about 11% of the population ranks above 800 and 20% ranks between 750 and 799. So, if your goal is to rebuild your credit history, you have to start by paying your current bills on time and in full. Missing only one payment can knock 50 to 100 points off of a good credit score. And since your bill payment history is the most significant aspect in determining your credit score, when you start faithfully paying bills, this immediately sends positive information to your credit report, which in turn starts rebuilding your credit. One way to pay bills on time is to have as many bills as you can on automatic payment, which takes payments directly from your checking account. That way you won’t have to worry about getting them paid.
Other Tips for Rebuilding Your Credit
Pay down your debts. When you pay down your debts and start charging less on your credit card, you definitely start rebuilding your credit. In fact, the more debt you pay, the better your credit score. One way, to pay down debts is to start paying attention to your income sources and your expenses, such as mortgage or rent, car payments and other expenses such as clothing, utilities, etc. Make a promise to yourself that you will spend two months writing down all your expenses. When you’ve written everything down, make a comparison between your expenses and your income. If you see clearly that you’re overspending, cut back and try to find more income. This way you begin noticing your spending patterns, which can help you understand what changes you need to make in order to rebuild your credit.
Use Credit to Rebuild Credit
Strange as that sounds, it is true. Creditors like to see credit payment history, so if you have a credit card, use it. Make small purchases but pay them off to avoid interest charges. If you don’t have a credit card, you should get one. If you know you won’t be approved, find a co-signer or apply for a secured card. A secured card is one where you deposit some money into a savings account and then you get a credit card with a line of credit based on the amount of money you deposited. But be sure you’re ready to start using credit again because you don’t want to wind up with a high credit card bill that gets you in trouble again.
Consider Credit Counseling
If things have gotten out of hand and you’re feeling overwhelmed, it might be a good idea to work with a credit counseling service. For a lot of people budgeting is hard, so when you work with a Credit Counselor, they help you negotiate lower interest rates and help you set up a budget, which in turn helps, pay off your bills in a shorter amount of time. Working with a credit counselor will not hurt your credit score as some used to think. Today, any reference to credit counseling is removed from a credit report after your repayment plan has been completed.
How Long Will it Take to Rebuild Credit
In most instances, it will probably take about two years to rebuild your credit. At that point, you won’t be turned down for a major credit card or a loan. After about four years, you probably will be able to qualify for a mortgage. So if your goal is to have a creditworthy report, be conscientious when it comes to your new credit. Use the credit you have obtained wisely by making payments on time and never being 30 days late again. Even those with bad credit will see a major improvement in a year or two of intense effort if they take the steps to improve their credit report.
About the Credit Counselors at Straight Credit Counseling
We at Straight Credit Counseling do everything we can to help individuals and families get back on track and totally out of debt. Credit Counseling services offered by Straight Credit Counseling helps individuals repay their debts by using careful budgeting and management of money strategies. A qualified credit counselor offers advice on how to manage outstanding debt as well as answering various credit questions. If you are ready to improve your credit, the team at Straight Credit Counseling is available to conduct a no obligation consultation. Please feel free to e-mail us at info@StraightCreditCounseling.com. Contact us today and rest in the knowledge that your credit report will soon be one that you’re proud to present.