Most people are aware of how important credit is. You need good credit to secure a loan or to have credit extended. While some people may be able to get away with not having credit cards it is difficult to go through life without financing a home or vehicle. Credit can also affect your insurance premiums and can even determine whether or not you get a job. Credit affects many aspects of life so it is imperative that it remains in good standing. However, sometimes people get into financial trouble and their credit is damaged. This is especially true in times of an economic downturn. This does not have to ruin your life, though. There are things you can do.
- Check your credit report regularly and make sure there are no inaccuracies. If there are negative entries on your credit report erroneously this can be resolved easily. Don’t let issues that are incorrect negatively impact your credit.
- Even if you have late payments currently on your credit, it is not too late to improve it now. Start paying your bills on time so payments are received before the due date. If you can not pay everything on time, pay as many of your bills as possible on time and try to catch up with the others as soon as possible.
- Close any negative open accounts. If you have past due bills that still have a balance, resolve them. Contact the credit company and try to settle with them. Often you can settle for less than your balance just so they get something. Then your account will be closed and this will improve your score.
- Start paying down your credit cards and loans. Pay more than the minimum amount required to avoid interest rate charges and to get your balances lower as soon as possible. With your current finances, stop using credit entirely and budget so your spending gets accomplished with cash only. Be disciplined so that if you do not have the available cash to buy it you wait until you do as opposed to breaking out a credit card. Your credit cards should not have any more than fifty percent used of your credit limit on a worst case scenario. It is best if you keep it at 20% or lower. If you can start paying credit cards off in full monthly, you will be in the best shape possible.
- If you are over the recommended percentages of your credit limit and have decent enough credit to get your limits raised you may want to do this to improve your ratio. However, if this will prove too tempting a problem and you may use that credit, do not do this. Only use this if you believe you can be disciplined enough to leave your remaining balance alone.
- Establish various credit types and keep them current. For example, if you have a mortgage but no credit cards, open one or two credit cards. Having credit cards, a car loan and a mortgage are good to show diversification on your credit report.
- If you can not get an unsecured card, get a secured one. You can only charge as much as you put in but this will help reestablish your payment history so that you improve your credit score.
- Don’t forget that time will work in your favor when it comes to negative credit. Older negative accounts will eventually drop off. After seven years a negative report will be completely gone from your report. If you have a bankruptcy this will be gone after ten years. However, with each passing year if you maintain good credit habits you should see improvements in your credit scores.
More articles:
- Top Ten Ways to Build and Maintain Good Credit
- The Truth about Credit Scores
- What you Don’t Know About Credit Cards
- Myth Busting: Marriage and Credit
- Why do you Need Good Credit?
- How Bad Credit Impacts Your Life
- Credit, Debt, Banking: Are you Paying too Much?
- Credit Card Basics
- Credit Inquiries Can Hurt your Credit Score
- The Downside to Store-issued Credit Cards