Many people suffer with “poor to fair credit” or in the last 5 years have suffered some kind of credit incident and this can affect your future for a long time. There are many companies that claim they can repair your credit however; with a little bit of knowledge you can do the same things for yourself. Here are some tips on how to accomplish this.
1. Get a full credit report from the approved free site. Be careful not to sign up for 3rd party monitoring that offers a free report with your membership:
a. This can be easily obtained ….go to http://www.annualcreditreport.com and obtain a free report from each of the 3 credit bureaus
b. Check all of the information on the credit report to verify that the information is accurate and all about you. Do not enter a bunch of disputes about addresses, name, etc. Disputes are a detriment when applying for a home loan.
2. Pay off your negatives:
a. If the poorly rated items have occurred in the last 12 months, pay or settle them.
3. Start to rebuild!
a. Keep credit balances between 30-50% of the credit limit of the card.
i. Never max out your credit card even if you make payments on time.
ii. You should never allow a card to become fully inactive.
b. Retain accounts you’ve had the longest:
i. This shows longevity in your credit profile
ii. A good rule of thumb is to have 3 open trade lines at all times
4. Use a secured credit card:
a. A secured credit card is one of the easiest ways to build credit.
b. Apply for a small installment loan. Some banks offer credit builder loans and at the end of the term you have a small CD.
c. Put a sizable down payment down for a car and borrow a small amount instead of paying cash for a car and then pay off within 12 months or more.
5. NEVER pay 30 days late on any credit account.
a. This will automatically drop your credit score
6. If you are looking to make a major purchase such as buying a home, keep credit inquiries at a minimum.