Important Steps to Repairing Your Credit Score

Sat, Jun 16, 2012

Financial Advice

Despite being something that most people never get to see, our credit scores these days exert a great deal of influence on our lives. That’s because anything we want to do to improve our personal and economic well-being, from job interviews to mortgage applications, car loans to credit card applications all involve someone checking our current credit rating. But the problem with that is that oftentimes our credit score takes a hit when we need it the most, particularly at the moment when the world wide economic situation is so dire and more and more families are struggling with mounting debts. In such circumstances a great many people are discovering what happens when they get into trouble financially and what happens when their credit score drops – it becomes impossible for them to get loans with their bank or with any other financial institution. And only when they have repaired that credit score will they be taken seriously when it comes to loan applications.

But how should people go about repairing that credit score once they get themselves into trouble? The first answer is to say that people should steer clear of companies promising quick fixes. There are plenty of companies offering super fast credit repair for a price. But it is a fool’s gold. The only way for people to truly repair their credit is slowly and on their own. Not only will this encourage them to do it properly and get them into good financial habits for life, but also they wont have to pay anyone to do it. All it will take is patience and sensible close management of their finances for a few months. This can be done through the following basic steps:

Prompt Payment of Bills: Many people will have got themselves into trouble because they were disorganized in their finances and never got their bill payments in on time. That must not happen if they are to repair their credit score. From the moment that a person commits to reorganizing their finances and fixing their score there can be no financial mistakes ever again. Late payments are like a red flag on a credit score that someone is a credit risk – and the more of them there are, the greater the detrimental effect they will have on someone’s rating. That is why it is essential to ensure that payments are on time every month without fail and that they always cover the requested minimum amount. If someone thinks they will never be that organized, the best thing they can do is set up a fixed standing order that makes a payment at the same time each and every month.

No More Credit Applications: One mistake that a great many people make when they get in a hole is to keep digging. Once they get into debt they keep on trying to borrow their way out of it. And even if they are turned down for a loan they keep applying for more. This is another mistake. Once someone has been turned down for credit they should never apply for more credit until their credit score has improved and gone back to normal levels. If they do keep applying, each application that they make and each rejection they receive will leave a nasty red negative mark on their credit file. A large number of such rejections will massively reduce their score and what’s more will appear to any prospective lender as if they are desperate. People should always wait at least three months before making another application.

Wipe The Balance, Not The Account: Naturally the ultimate aim of any financial reorganization is to get out of debt and get to the point where people don’t need to borrow any more money or take out any more credit cards. However, whilst they are still getting themselves on their feet it is to their advantage to keep all of their credit card accounts open, even if they have cleared the outstanding balances. This will take some restraint, as leaving the account open makes it very tempting to start spending again. But, if people have unused credit available to them it is a very positive factor on their score.

Keep an Eye on The Details:
And finally, it is always worth people keeping an eye on their file online, checking in regularly and ensuring that the details are all correct (such as address, bank details etc) and that no fraudulent activity is occurring in their name.

Lastly, above all people should aim for stability and responsibility in all their financial transactions, keeping their long-term bank accounts open, registering to vote and not moving house too often. All of this will show stability and make them appear to be a good candidate for any future credit applications.

Alex is a financial blogger and writer. He covers everything from mortgages and unsecured loans to taxes and investments. He also writes for www.paydayloansuk.org.uk .

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2 Responses to “Important Steps to Repairing Your Credit Score”

  1. australia credit repair Says:

    Hi,

    I do not charge my customers for credit repair, i do mortgages and provide it as a free service for my clients. What im looking for is a company i can outsource the dispute to.

    Thank you all in advance for any help!
    Forget it, im not looking for a link to a so called credit repair place neither am i looking for someone to tell me credit repair doesn’t work. It does work because i have done it many times for my cusotmers.

    Reply

  2. CreditZeal Says:

    Excellent credit repair advice. Your credit score is arguably the most important 3 digit number in your life and you need to protect it and look after it.
    CreditZeal´s last blog post ..Loan Shopping and Your Credit Score

    Reply

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