Repairing Credit

A guide to boosting your score and preparing for a home purchase.

To be clear, there are no quick fixes to repairing credit. Any company spouting the contrary should be approached with caution. Unfortunately, there is no “buyer beware” when it comes to finding sound credit advice. This is why it’s vital to your success to seek out a legitimate credit counselor instead of quick-fix associations. The other key paramount in credit repair is consistent, long-term management. Here are the top 3 habits you should start today to begin your journey to a perfect credit score.

1. Payment Reminders are Your Friend

Nearly all banks offer this as a FREE service that you should absolutely take advantage of. Your bank will give you the option of being notified via text, email or push notifications. Another alternative is to establish recurring payments through your financial institution’s automated bill pay service. In most cases this is also free and you won’t have to worry about making payments in a timely fashion; your electronic payments will happen like clockwork. You can usually cancel automatic payments at any time. One of the biggest factors in calculating credit score is completing payments on-time. You want to be sure these are set up correctly and going out on time.

2. Reduce What you Owe

I can’t stress this enough: STOP using your credit card! Then research the amount you owe on each of your outstanding lines of credit. You’ll also want to compare the interest rates of all accounts. Use this information to come up with a payment plan based on those two criteria. Cards or loans with the highest interest rate should be paid off first, but continue to pay at least the minimum on other accounts. Please note that once you pay an account off, it will still be on your credit history for 7 years.

3. Get Current and Stay Current

Easier said than done, I know. I cannot emphasize enough how crucial it is to make consistent payments on accounts, especially newer ones. In the land of credit, time counts for a lot. So the longer you can keep an account current, the better.

Some General Tips

1. Keep balances low on revolving credit– high outstanding balances resulting in a high debt to income ratio will negatively effect your score.

2. Payoff debt rather than moving it around- Having the same amount of debt owed, but in fewer accounts can actually lower your score.

3. Don’t open accounts just to increase available credit.

4. Absolutely do not open a lot of accounts in a short period of time.

5. Choose the right credit counselor who will help you fully understand your credit history.