The lingering effects of the recession can still be seen in the terrible credit condition of consumers. From bi mistakes like a foreclosure or a bankruptcy to a seemingly harmless late payment on your credit card bills or loans, all of these can o a long way in damaging your credit score for a long time to come. However, there is no need to despair as there are different ways in which your credit score can bounce back from these disasters.
Firstly, take a good and long look at your budget versus your income. For proper money management, it is vital that you take a look at how much money is coming in every month and then review it viesa vies the amount that you are spending on basic expenses and the variable expenses. Once you have made your budget, identify what your priority expenses are for every month. Then make the accordingchanges by either increasing your income or by cutting down on some of your expenses.
Top credit repairtip: Use financial software like Microsoft Money or Quicken to create your own monthly budget once you have a clear picture of your financial situation.
The second step is to get a copy of your credit report in case you don’t have one already. If you need to sit down with your creditors and work out a financial management system to improve your credit score, you need to know how your credit looks like in the first place. You are legally entitled to one free copy of your credit report once a year. Get a copy and o through it with a fine tooth comb for any errors. If you find any, then contact the agencies and ask them to correct it after making a thorough investigation.
The third step in correcting your credit is to get in touch with your creditors and service providers as soon as you can. If you are in some financial trouble then they need to know immediately so that they can advise you on how to start managing their accounts. Get in touch with them individually and explain to them that you are in money trouble. This could be anything from sudden unemployment or a medical/family emergency. Now sit down with them to create a new plan of payment and start making your payments accordingly.
Remember that timely bill payments o a long way in improving your credit score. Credit card providers always keep track of your payment habits and it reflects accordingly on your credit score. This extends to all bills (your rent/mortgage payments, loan payments, medical bills, etc) and not just credit cards. Keep receipts to record the fact that you made your payments on time.
Changing jobs too often doesn’t reflect well on your credit. If you want to indicate to your future and current lenders that you have the ability to make stable payments on a loan or credit card then make sure to stay in your current job for at least a couple of years to build confidence in your repayment abilities.
If you have already created a new repayment plan for your debts, then whatever new credit you have in the form of credit cards or loans should be sued judiciously. Make your payments in a timely manner, don’t max out on your credit cards and don’t just make minimum payments to get by. Don’t apply for a new credit card or account until you have maintained your new budget on a consistent level for a few months at least.