How Do You Rebuild Your Credit?

Living in the United States, one thing that is important to you as a consumer is knowing how do you rebuild your credit. The system is set up so that it is a good thing to be able to purchase goods on credit, but then again, it is not a good thing when you do not repay the credit that was extended to you.

Here are a few points to keep in mind to ensure that you do the best thing to improve your credit score in a good way.

 

how do you rebuild your credit

 

If January has been a harsh month for you and your wallet so far, you are probably starting to wonder what effect all the overspending has had on your credit score.

Everyone goes through stages in their lives where the credit score will suffer. Don’t worry, it is completely normal and you are not going to fail epically at life because of it.

Many people who have a bad credit score will start rebuilding their credit through the next few months, and you can use rebuilding credit cards to help you do it. If you have found yourself in a financial pickle, here are some ways you can work through it and get back on track.

1. Check Your Credit Report

how do you rebuild your credit

 

The first thing you need to do when you have realized there is something wrong with your credit score is to check your report. You have the right to request your report for free from one of the three main credit bureaus, so make sure that you take advantage of this and bag a copy while you can.

Once you have the report, you need to scan it and make sure that all of your information is correct. If another person’s account has been linked to yours, this might be dragging you down so you will need to get it sorted out.

2. Catch Up On Your Payments

One of the largest factors which will be affecting your credit score is your payment history. In order to make sure that your payment history is as good as it can be, you will need to make sure you start catching up on missed or late payments.

It is crucial that you can prove to potential lenders that you are able to keep up with payments on time, this way they will be more likely to offer you a loan.

3. Pay Your Bills On Time

how do you rebuild your credit

Now is the time to bring better financial habits to your life, and you can start by changing the way you pay your credit back is the way to go. You need to start putting away enough money each month to pay off your bills on time so that you don’t start to accrue even more debt than you already have.

By introducing this habit into your life you will have a much better chance of paying off all of your bills and staying financially stable.

4. Avoid Closing Credit Cards

Whenever possible you need to try and avoid stopping your credit cards. You may think that this is counterintuitive when you are trying to rebuild your credit score, however, it will actually count positively for you.

By keeping your accounts open, you are upping the length of your credit history which is a huge bonus and will make a positive difference to your credit score in the long run.

5. Pay Down Debt

how do you rebuild your credit

Credit utilization is a huge factor when determining your credit score. It is the measure of how much debt you have and is expressed as a portion of the credit you are using. So you need to keep this in mind as well.

I hope that you have gained some useful information from this contributed article on how to rebuild your credit.

Images courtesy of Pixabay and Flickr.


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