How do I rebuild my credit?

Dealing with bad credit is never fun. It's also really easy to end up with a lower score than you deserve. A couple late credit payments, some poor choices on loans and - BAM - you have bad credit. So what can you do to repair it? Are there easy solutions to this problem? We're here to tell you: Yes there are!

We've included the best tips for beginning to fix up your credit score. It all starts with your report. Getting it can be more tricky than you'd guess, but if you know what you're doing, it's easy!

So what is the DIY Process?

To begin, you want to know exactly what your number is. This means it's time to check your credit report. Now, every person is allowed to request a copy of their credit report for free once a year. After that there will be a fee. There are dozens of websites out there that will get you your credit score, but some will try to charge you so watch out for the ones with credit card info pages before results.

The best site to go with is where you can get helpful direction from authorized organizations like the Federal Trade Commission. You'll be sure to receive the right information.

After receiving your report, scan it for any errors including but not limited to:

  • Late fees incorrectly listed for an account
  • Wrong amounts owed on any open account
  • Closed accounts displayed as open on your report

If you do see any of these things, than you can dispute the errors with the credit bureau and reporting agency by addressing each mistake in a letter to send with copies of your report to the credit reporting company (send it certified "return receipt requested" so you know it gets there). Make sure to be specific and clear in your letter so there are not further mistakes made.

If everything looks right than it's really time to get down to business. The two main ways to get your credit score on the rise is to remind yourself when payments are due and to start paying back what you owe.

Fixing your credit

You might find yourself looking into hiring a credit advisor or a company to repair your credit for you. As long as you find a legitimate company and not a scam this might be something helpful. Just know before you start working with a company like this, that you can do everything they do on your own, so if you want to tackle the situation yourself, you can. As long as you make informed and smart decisions, you can turn that score around.

Reminders, reminders, reminders

Set a reminder a few days before your payment is due so you can get ready to make it. How do you get ready for a payment? Well if you need to move money around here is your chance. I would also set a second reminder on the day the payment is due to actually make the payment. The final reminder I would set is the final day of the grace period. Some loans and bills give you a few days (some a week) to make your payment. Setting a reminder on the first day and the last day will guarantee you make the payment.

Another option you have with some companies and lenders is to set up automatic payments. Then it's not up to you to make the payment, but up to them to take the money out of your account. This way you'll know when to be sure that money is in the proper account.

Paying it all back

Recognizing how much you actually owe might seem a bit daunting, but don't worry, you can do it! The best way to start is to make a chart or list of each credit card you have, how much you owe on it, and what the interest rate is.

Once you know which ones you owe the most on, and which debts and interest rates will hit you hardest, you want to start putting money toward them. Now there are two ways of going about this. The way I suggest is to get rid of the high interest loans/credit cards first, this will help you not continue to fall into debt but instead be left with lower interest rate debt and lower payments.

Always remember that debt elimination will be a long process. You want to make sure you are not only paying the minimum on the cards but also focusing a hefty part of your budget on paying everything back.

Becoming debt free

As you pay off your debt remember this is not a permanent fix unless you make a lifestyle change. If you don't change how you live, you might find yourself back where you began. Some tips to remember and live by are:

  • Pay your bills on time, always
  • If you do miss a payment, fix it
  • Collect accounts stay on your credit report, so avoid them
  • Seek help from a credit counselor if you need it

Above all else stay in control. Managing your finances can be a struggle, but with some help you can get back on your feet and find yourself looking at a better credit score. It's just a manner of recognizing what needs to be fixed and doing it. So start your journey to better credit today.

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