6 Things You Can Do to Start Fixing Your Bad Credit

While the economy seems to be stuck in a never-ending, downward spiral, it is important for people to realize that it is never too late to start fixing your credit score.  Millions of people in the Unites States have some form of debt that may be impacting their credit.  If you are one of these people, do not think that your credit is necessarily ruined.  Even if your credit may look ruined, it is not.  There are multiple ways in which a person can improve their credit.  It is vital to remember that improving your credit score is a lot like trying to lose weight in that it is a long, demanding process that requires commitment, and may take some time to see results.  By managing money responsibly and being dedicated to the cause, you will see long term improvements in your credit score.  The most important aspect of improving your credit is to remember that significant results only come with time. When contemplating ways to improve your credit score, be extremely cautious of quick help solutions or people who say they can drastically improve your credit score over a very short period of time, for this is typically the most common method to back fire.

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What you can do to start fixing your bad credit

  1. Credit Score— The first step to improving your credit is finding out what exactly your credit score is.  There are multiple resources you can explore that can provide you with your credit score, both online and in person.  Before you try to improve your credit, you should examine your credit score and make sure everything is correct.  Check for possible incorrectly listed late payments on all of your accounts.  Check to see how much debt you actually owe.  Finding out the answers to questions like these will help to guide you on your path to improving your credit score.
  2. Pay bills on time— When trying to improve your credit, you should focus extremely hard on paying your current and future bills on time.  Roughly 35% of your credit score is made up of your bill payment history. Paying your bills on time can have an unbelievable impact.
  3. Set up payment reminders and due dates— Every month, sit down with a planner or agenda and mark all of your bills on the days that they are due.  Write reminders on a calendar that you look at regularly. By doing this, you are less likely to miss or be late on a payment.  Writing down your bills also gives you a visual and better understanding of exactly where you are at financially.
  4. Stop using plastic— A major aspect of improving your credit score is taking care of past debts, whether it’s credit card debt or something like a title loan from TitleMax.  It is counterproductive to add more debt to your financial situation while you are still paying off a previous debt.  To help get rid of past debt and avoid new debt, stop using credit cards and try to only use cash. 
  5. Live inside your means— In today’s world, it is very easy to get caught up in possessions.  Who doesn’t want the new iPad or the biggest and best television?  The problem is, not everyone who wants these items can afford to purchase them with cash, leading them to debt.  Even those who can afford to purchase these luxury items with cash may be put in a tough situation when it comes to bill paying time.  To improve your credit score, you must take care of past debts while focusing on making on time payments.  By living inside your means and purchasing what you can actually afford, you will be able to handle past debts and secure your future payments.
  6. Open another bank account— It may be hard to fathom, but opening another bank account could actually improve your credit over a period of time.  To help pay off debt, open another bank account strictly for paying off debt.  Any time you receive money, be it from a paycheck, birthday, holiday or whatever, decide how much you need at that exact moment and place that into your personal checking account.  Take the rest of the money and place it into your debt account.  By doing this, you will be building up a set of cash strictly for paying off debt.  This will also keep only a certain amount of available money in your personal account at any given time, which will help you decide when you should be spending money.

With these tips, you can take the much needed steps to improve your bad credit and get back on track. 

James McKinney is a financial expert who coaches individuals on building wealth and eliminating debt.

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