When it comes to credit clean up, there is, unfortunately, no quick fix. Anyone that tells you different is selling something. Credit restoration takes time, but if you’re willing to work at it, or work with a reputable credit repair service, your credit can be cleaned up in a few months and you’ll be on your way to a respectable credit score. Here’s a quick look at the steps you need to take for effective credit clean up:
Step 1: Get Your Credit Report
This is where credit restoration starts. You need to get an updated copy of your credit report from all three credit bureaus. You are entitled to one free copy of these reports each year. So, if you don’t have your credit report yet for this year, go online and get a copy. Save the report from each credit bureau and print them out so that you have a hard copy, as well.
Assess the Damage
If you’re working with a credit repair service that service can go over the credit report with you and help you understand your credit report. Your credit score is made up of several factors including negative items which are not paid or in collections, the amount of credit that you have, how long you’ve been using credit, and whether or not you carry a balance on your credit card. Each factor affects your credit score differently. For example, your running balances have more impact than the length of time that you’ve been using credit. You need to understand what is causing your bad credit score and what factors are most important. Those are the ones that you should work on fixing first.
Step 2: Make A Plan
The key to credit restoration is to make a plan to fix your credit based on your own personal circumstances. If you have a lot of items in collection and that is what is pulling your score down, then you will need to make a budget and a plan to pay off as many of those accounts as you can. If what is causing your low score is that you don’t have enough credit, you will need to plan out how to get more without dragging your score down. A secured credit card is a great way to increase your credit and boost your score. It’s also important that you don’t start applying for many different credit cards. Each time you apply, it will ding your existing credit. Choose one or two of the best cards out there and apply for those and those alone. A credit repair service can help you look at all your options and choose the best path forward based on your individual situation.
Step 3: Pay Down Your Balances
If you are carrying a balance on existing credit cards, you should pay those balances off or, at least, pay them down. To boost your credit score, the balances on your credit cards should not exceed 30% of your available credit.
At Your Personal Finance Tips, we are dedicated to teaching you about credit restoration, credit management, personal finance, and everything in-between. Additionally, we also provide reviews of the current top companies in the field to help you choose from popular names. Visit our homepage to learn more about best credit restoration practices