How To Repair Your Credit
Tackle credit problems the right way
If you've gotten into debt problems that have sent your credit score plummeting, then knowing how to repair your credit is essential to rebuilding your financial health. Credit problems affect millions of people in all income brackets, and while it can take time to fix your credit, the good news is that there are proven ways to go about it. Knowing what works when it comes to how to fix bad credit is the essential first step in putting credit problems behind you for good.
Steps to Repair Your Credit
Here are reliable strategies you can use to fix your credit:
- Access your credit report. It's important that you know what's on your credit report, because there may be inaccuracies that are adversely affecting your credit. If there are, report them to the credit tracking agency as well as your creditors.
- Reach agreements with your creditors. If you're struggling with credit card debt you can't pay, you'll likely find that many creditors are willing to work with you rather than force you into bankruptcy (in which case they will get nothing). Learn how to write a debt settlement letter and create payment plans you can live with.
- Make all payments on time. Whether you have reached payment agreements with creditors or are just paying down regular debt, always make your payments on time. This will prevent your credit score from getting worse, and over time, on-time payments will lead to steady improvement in your score as your debt load reduces.
- Don't close all your credit accounts. While you may be tempted to cut up all your credit cards so you don't rack up any more debt, this is actually a bad move. Closing all your accounts will lower your score, making it difficult for you to open new accounts in the future. Instead, leave some of your credit accounts open so your good payment history and responsible future use of your credit card can be tracked.
- Get a secured credit card. Another way to improve your credit score is to get a secured credit card, which has a fixed limit that you have backed up in the form of savings in the bank. This type of card is an excellent vehicle for improving your credit score; use it responsibly and you can repair your credit within a couple of years.
Debt counseling and debt consolidation can also help you if you're stuck in an endless cycle of credit card payments. You can't start to repair your credit until you find a way to get out of debt, so make paying off your loans and credit cards your number one priority, and avoid getting into further credit trouble by limiting or eliminating your use of credit cards.