Your credit score can hang over your head for years, and affect a number of lifestyle choices, from your job to the kind of car you can buy. Good credit opens the gates wide, but bad credit leaves you in the cold.
Many factors contribute to a bad credit score, and it’s not always clear how they might apply to you. Most important, paying your bills on time will set you up for good credit.
But if you’ve run into tough financial times or your irresponsible younger years catch up with you, your credit can suffer. Once you have a low credit score, it’s difficult to get a loan, housing, or even a job.
Fortunately, your credit can be repaired, but you’ll have to walk a certain path to get there. If you need a strategy for credit repair, here are some options.
- Check Your Credit Report Frequently
You can’t start making reparations if you don’t know what your credit score looks like. You can usually request a free credit report through your financial institution or other services, and it’s wise to check it often.
If you’d like to see your actual FICO credit score, however, you’ll have to request a copy through myfico.com. Once you have a copy of your credit report, you can get a sense of how much work you’ll have to do to repair your credit.
You should also scan the documents for errors. They’re not common, but errors do occur. If you spot mistakes that make your credit look worse than it should be, you can request a dispute to fix the problem.
- Start Paying on Time
Credit scores can be repaired over time, but it starts with paying your bills before the deadlines. Make payments a few days before the due dates to make sure you don’t miss them and suffer a late penalty.
You won’t be able to fix your credit score overnight this way or even in a few months. It typically takes about 7 years for late payments, foreclosures, tax liens, bankruptcies, and other credit issues to age off your report.
Don’t allow any late or missed payments during that time.
- Remind Yourself to Make Payments
If you want to avoid further missed or late payments, setting up reminders is the best way to do that. Writing down payment dates on a calendar or scheduling reminders on your phone are effective methods to meet all your deadlines.
An even better option is to arrange for advance payments through automatic billing. Most online banking systems have a bill-pay function that lets you automate and schedule monthly payments so you don’t even have to think about them.
Just make sure there’s adequate money in your checking account that you don’t overdraft!
- Focus on Debt Reduction
While you’re trying to make on-time payments without overdrafting, having to focus on debt reduction can feel overwhelming. Think of it in terms of the benefits to come, however.
Eliminating your debt means you’ll have fewer payments to miss, and that increases your chances of adequately repairing your credit. You can use your credit report to make a list of all outstanding balances.
Note the interest rates and work on paying down debts from the highest-interest accounts to the lowest so you’ll pay less in the long run. Develop a solid payment plan that will support your repayment plan and rid you of debt as quickly as possible.
As you make payments on your outstanding balances and avoid building more, your credit will steadily improve.
- Lengthen Credit History
Just remember you won’t fix bad credit in 30 days or even 90. Most of the time, it takes a couple of years of steady payments to alter your credit to an acceptable level.
By lengthening the terms of your positive credit history, you can begin to eliminate some of the items that have dragged down your credit. Again, this takes time. Don’t try to jump the gun and open new credit accounts right away.
Your credit history length is determined by the average accounts you have open. When you have good credit, opening new accounts isn’t a problem, but that can be very damaging to low scores.
New accounts can lower your average account age and reduce your ability to establish long-lasting positive credit. Focus on improving your accounts that are already open.