Bad credit can keep you from buying important things such as a house or a car, and it can stay with you for a long time. The good news is that there are ways to repair your credit, but they take time and self-discipline to work.
1. Check your credit report
If you suspect any inaccuracies, then check your report to see if it matches your debts and payments. If something’s amiss, contact your creditors and a major credit bureau to explain what’s wrong. Then, make sure they send you a correction in writing if they decide to change it.
2. Live within your means
It may be obvious advice, but it’s still a good idea. The first step is to stop using your credit cards as often as you are. You should also consider using cash or money orders to pay off some of your debts as you get your credit cards under control. You can also cancel a card or two, but don’t cancel the card with the oldest credit line. Doing this makes your report look younger and worse.
You should also do your best to pay all of your bills on time since your payment history makes up over a third of your overall score. A good way to do this is to make payment plans or set up reminders each month.
3. Pay off your debt
Doing this is easier than you may think. First, you should try to contact your creditors as soon as you can. They are surprisingly flexible and can accept fairly small payments. You should tackle your high-interest debts first since overcoming them brings quicker improvements to your credit than low-interest debts. Second, set up a second bank account that’s reserved for your payment money. This way, you’ll be able to force yourself to only use so much a month for food, utilities and other necessities.
4. Use credit cards responsibly
Early on, this means using secured credit cards from your bank or credit union. Try to find ones with no interest in the first few months and no annual fees. As your score improves, you can return to traditional cards. When you go back to regular cards, don’t use too much of your credit card’s balance at any time. A good rule of thumb is to only use up to one-fifth of a card’s limit no matter how big that limit is.
For more information on repairing your credit, take a look at this credit repair guide from CreditMarvel.com It has some really useful tips and resources that can help.