Your credit score doesn’t drop overnight, so you can’t fix it overnight either. It’s important to recognize that it will take determination, discipline, and likely some hard decisions as you work to get out of debt and improve your credit score. Here are four things you can do to start right away.
Pay on Time, Every Time
This may seem easier said than done, but it’s the best thing you can do as you start to rebuild your credit. Since your credit score is simply a measure of whether you pay your bills on time, you can show lenders you are trustworthy by doing just that. If you find yourself drowning in debt, contact a debt consolidation specialist before considering anything like bankruptcy. There are many options for reducing your interest rates and making it easier to pay your bills while improving your credit score.
Keep Balances Low
Another thing that determines credit score is called “credit utilization.” This is basically a percentage of what your balance is in relation to your credit limit. Try to keep your balance under 10 percent, if you can. That may mean sticking to a monthly household budget that requires tough spending decisions.
Be Careful With New Applications
Even if you are in the process of rebuilding your credit, you still may want to get a car loan or refinance your home. Those financial decisions may be a great idea to improve your credit if you are able to make the monthly payments, but when you are shopping for a loan, try to limit the quotes to one every two-week period. Lenders perform “hard inquiries” on your credit report that can negatively impact your credit score. Leave time in between applications for new credit cards as well.
Make Good Habits Last
Improving your credit score and keeping it high can be a long process. In the meantime, focus on creating healthy financial habits. Paying your credit card bills on time and reducing your dependence on your cards will help you in the long run. By following a budget, you’ll find that your score will eventually reflect your efforts. Be patient.
Debt consolidation can be an effective way of getting a handle on your debt. To learn more, go toRefi.com today.