Repairing A Damaged Credit Score

When it comes to your credit score, unfortunately, a lot of people feel that if their credit is ruined, then it is ruined for good.  This is not so.  Even if your credit rating is below the basement (750 is excellent, 650 stinks, below 600 means you’re pretty much screwed), you can still come back.  All it takes is some due diligence and financial discipline.

Firstly, you’ll want to order copies of your credit report from all three credit bureaus, Equifax, TransUnion, and Experian.  Not everybody reports to all three bureaus, so you will need all three to glean the most complete picture of your current credit condition.  You can do this for free once every year, and it is recommended even if your credit rating is excellent.

Resolve your debt.  Out of control debt is one of the main reasons people have low credit scores.  Devise a spending plan that reduces your debt and gets you set up to pay everything on time, each month.  If you are in a difficult spot, do not hesitate to call your creditors and tell them. Many will work with you to make sure your debt doesn’t end up being classified as delinquent or “bad debt”.  Ask for reduced monthly payments, or perhaps changing the date your payment is due in order to help balance out the month.

If you have any accounts that are already in collections, deal with those first, as they are the ones poised to do the most damage to your credit score.

Slowly close out any unneeded or unused credit cards or accounts.

You can also be proactive in adding information to your credit file.  Before opening any new accounts, ask them if on-time payments will be reported to the credit bureaus.

If you have really bad credit, then it is important to begin rebuilding good credit right away.  This may be easier said than done, but you will find companies that will extend you that second chance.  If they do, then pay your bills every month, on time, every time.  The faster you do so, the faster you will improve your credit score.

Quick note: don’t go overboard.  Too many credit applications can look bad and have a negative impact on your score.  Look for the best deals, interest rates, etc., before applying for new credit.

Open a savings account at your bank (and keep adding money to it).  This will show your creditors that you are serious about working hard to save money and that you have sufficient funds to repay debts.

Of course you must beware the scams that go along with any credit repair efforts.  You will receive mail, e-mail, and phone calls from companies offering to help clean up your credit report…..once you pay them an upfront “administrative fee” of course.

Taking the proper steps, in the proper order, not to mention exercising some fiscal responsibility and self-control, will go a long way towards helping you re-establish a healthy credit rating.

Now go therefore and spend wisely…..

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