Repairing Your Credit

March 30th, 2016

If your credit isn’t the greatest, don’t worry. You’re not alone. Credit issues are very common. There are many different reasons why a person’s credit may be less than stellar. They may have been in collections too many times, or have too many payments past due, or maybe they just don’t have enough revolving activity. Whatever the reason, credit problems can really put a damper on your plans, and fixing the problems can sometimes take a while. Here are some steps you can take to repair your credit in a timely fashion.

Check your Credit Report

Before you get started repairing your credit, the first thing you will need to do is to access a copy of your credit report from AnnualCreditReport.com. Everyone is allowed one free copy of their credit report from each of the major credit bureaus each year, and you will want to check the report from each bureau because one might report things that the other two don’t report. Once you have reviewed your credit reports, you will want to dispute any errors that you find. Once you’ve checked your report and disputed any errors, follow these steps to repair and rebuild your credit:

Check your limits often – Your credit limit may increase if you consistently pay on time, however you never want to go over your credit limit, so check your balance regularly.
Get another line of credit - While it seems counterintuitive to repair your credit by opening another line of credit, if you are responsible and pay your debts in a timely fashion this can be an extremely effective way to improve your credit.
Share credit with someone else - Or become an authorized user on someone else's account who has excellent credit, because it will positively affect your credit.
Don’t use credit cards frequently - Use them when necessary or for small purchases but don’t use them for everything. You want your credit utilization ratio to be 30 percent or lower. Credit bureaus want to see responsible spending habits, rather than spending an excessive amount at one time, regardless of whether you are able to pay it all off on time.
Ask for a credit limit increase - But only if you know that you will be disciplined enough not to spend more, now that you have more to spend. Asking for a credit limit increase is all about improving your credit utilization ratio.
Don’t cancel any cards - It seems silly to keep a card open that you don’t use and don’t plan to use, but sometimes it can negatively affect your credit if you cancel a card. Try to keep a small recurring charge on the card, like your phone bill or utility bill, so that you have some activity.
Have other forms of credit - Having credit cards is fine, but it may help to have small personal loans and maybe even some leased items to improve your credit score a little bit. But only do this if you know that you will be able to make the payments on time.
Pay your bills on time - This tip really goes without saying; paying on time is the most important factor in having a good credit score. Set reminders so that you pay on time if you tend to be forgetful.
Pay bills twice in a month - This helps to break up how much you owe and how much interest you pay.