In a world where the cash flow typically runs out at mid morning on any given business day, credit is the lifeblood of our nation’s economic and business landscape. Individual credit scores determine the ability to buy cars and homes, and may even impact potential employment. Maintaining a reputable credit score should be a high priority, for no other reason than the security it can provide. Obviously the best way to do this is to manage your credit wisely, pay your cards off each month, and make every effort to live within your means. However, mistakes are made, mistakes that can affect credit standing for years or even decades. But even if you have made a gaffe (or three, or five), all is not lost. By taking the proper steps, you can restore your credit standing and be able to take full advantage of lower interest rates and other opportunities that a high credit score affords. Just follow these simple credit restoration tips:
Credit Reports – obtain copies of your credit report from all three reporting agencies, Equifax, Experian, and TransUnion. You will want all three because information may be slightly different from report to report. This will provide a comprehensive overall picture of your credit situation. Determine and prioritize what needs to be repaired, disputed, paid off, etc.
Past Due Accounts – Pay these off first. You do not want outstanding accounts to be charged off or sent to collection agencies. If you do have a charge off, pay it off anyway. Work with debt collectors to set up a manageable payment method for overdue accounts.
Maxed Out Accounts – Don’t worry about paying these off immediately, but do get them down below the limit, then concentrate on getting them paid off completely.
Consumer Credit Counseling – there are pros and cons to programs like this. In many cases, you can do yourself what these companies will ask you to pay for them to do. If your creditors are willing to work with you, do so. If not, a call to Consumer Credit Counseling might be in order.
Establish New Credit – if you can obtain new credit, use that to establish new, good credit information. Keep it down to one or two accounts, to keep your credit inquiries low.
A bad credit score is not forever. Taking careful, measured steps can result in restored standing and a new world of opportunity.