The Finance Owl

Banks – Loans – Mortgages – Money

Credit RepairIf you are struggling with a poor credit rating, solutions to your credit problems may seem far, far away. You probably feel somewhat overwhelmed by the situation and you aren’t sure where to start or what to do. These ten steps will help you get back on track to improve your credit rating.

Create a Budget – Before you even begin to think about eliminating your debt, you need to create a budget. Include all of your monthly expenses and your income. Keep it realistic and flexible so that it adequately reflects your situation, allowing it to work best for you.

Keep Track of Your Spending – Whether you are using cash or credit cards, record every penny that you spend. Carry a small notebook with you and jot down each purchase you make, the date and what the purchase was. This allows you to go back and identify trends in spending and you can see where you not be making the best spending decisions.

Can the Credit Cards – You only need four open accounts to create a positive credit rating from a negative one. Pay down all of your cards so that the balances are fifty percent or less of the credit limit. Once they are all paid down, you can begin to pay them off, starting with the card that has the highest interest.

Tackle that Debt – Just paying down debt will help to raise your credit score. You don’t have to wait until the debt is paid off completely, if you make regular payments on it, your score will improve.

Get a Copy of Your Credit Report – Everyone is entitled to one free credit report a year. Make sure that you get yours and review it carefully. The incidence of misinformation and credit reporting errors is surprisingly high and it is up to you, the consumer, to identify any errors and take the necessary steps to correct them.

Close with Care – Be careful about the accounts that you close. Some accounts come with fairly substantial penalties if you close them too early. You could find that paying off an account could result in a lower credit score which is the opposite of your objective here.

Don’t Make just the Minimum Payments – Making just the absolute minimum payment on your accounts each month is basically pointless. All you are paying in the interest and barely making a dent in the principal. Pay more and pay down your debt.

Stop with the Credit Applications – Don’t submit any credit applications while you are trying to raise your credit score. Numerous applications for credit show up on your credit report and reflect negatively on your score, especially when you are denied.

Get Help if you Need It – Sometimes you debt is just too big for you to handle. In that case, you will want to turn to the pros for help. Go to a credit counseling service and get someone to help you get your credit back on the right track.

Choose Your Debt Management Options Carefully – Not all debt management options are created equal. If you are in debt and feel that you need to take steps beyond these here, you can explore debt settlement, debt consolidation and other avenues. But make sure that you research each carefully and choose the one that is right for you.

Of course, debt and a poor credit history may be overwhelming. Having said this, you can improve your credit rating with proper planning even though it can be hard work to do so.