I will give you the 5 steps, you need to take, to improve your credit. Remember, it will take time for your credit to improve. I recommend that you take that time, rather than using companies that advertise that they can clean up your credit and the mortgage companies that specialize in "helping" people with bad credit get mortgages. You can do everything a credit-repair company can, and you'll probably do it better. Think of it in terms of a health issue – time heals all wounds, including poor credit scores.
So, let's get started:
1. Obtain free copies of your credit reports from www.annual-creditreport.com. Check them for accuracy. Dispute any incorrect items with the bureau that reported them. You definitely don't need any additional inaccurate or negative information on your reports. I suggest you get your credit score while you're at it. It will cost a few bucks, but it's worth it, as rates are sensitive to score levels.
2. Create a plan for paying off any negatively reported unpaid balances such as your repossession, student loans and that blemished credit card. Potential creditors understand that anyone can fall behind on a credit obligation. What they want to know is that you paid what you owed, even if it was much later.
3. Pay all of your current credit obligations on time. This is very important, as 35 percent of your credit score is calculated based on whether you pay on time. By making payments on time, you are illustrating to a potential creditor that you can be responsible with credit. Try to pay your cards down to less than 50 percent of your credit lines. This will help your scores also.
4. If you do not have any credit-card accounts other than the one that is presenting problems, open a new credit-card account. You might have to get a secured card if your credit really is bad, but go ahead and do it. You need to make payments on-time to prove you are creditworthy and that will be hard to do if you don't have an account on which to pay.
5. Be patient. In this situation, you need to think more like the tortoise than the hare. Slow and steady wins the race. While you are waiting for your new credit strategies to improve your credit, create a spending plan so that you don't find yourself in the same situation again. Save money for a down payment and in an emergency savings account, and live below your means.
You will be a homeowner before you know it! Good luck.
Karin Boode is the founder of the Loan Info Center, who strives to provide valuable information regarding any type of loan. |
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