Repair Your Credit

You made a few mistakes in the past, and now you are realizing that a good credit score is vitally important to your financial success.  Whether it was lack of information, lack of organization or just plain bad luck on your part, your credit score is not where you would like it to be and you want to know how you can repair your credit.  This can be a very tricky topic indeed, because there are all kinds of ideas out there for quick fixes that seem dubious at first blush.  Here are some of the credit repair basics to get you started.

Credit scores are calculated with a complicated algorithm that takes all kinds of factors into account.  This is why it can seem so challenging to know where to begin when you want to repair credit.  To know how to start working to repair your credit, you need to know your score.  Everyone is entitled to a free credit report every year, so take advantage of that and check to see where you are starting from.  When you get your report it will show if there are any outstanding bills that you owe and various things that have affected your score.  It is not uncommon to find errors on these reports, and if you do you can begin to repair credit by trying to clear up some of the mistakes.  Also, there may be items on your report that you have already paid off, but are still showing up because the credit bureaus are a little slow to process all the information.  If you are going to be applying for new credit, you should wait until these items fall off your report before beginning the process.

After you do your best to update and clean up your report, what can you do to improve it?  First, you should know that the most heavily weighted factor that contributes to your score is whether you pay your bills on time or not.  The good news is that this is completely within your control.  If this has been a problem for you in the past, get organized, make yourself a bill pay schedule and be sure to send in your payments days before they are due.  If you keep this up for many months you will start to make good progress.

Another huge factor that the credit bureaus look at when calculating your score is the total balance of your debits as a percentage of your available credit.  This means that if all your credit cards are maxed out, it is going to reflect poorly on your score.  Work to pay down your debts and create as much space as you can between your credit limits and your actual balances.  The ideal situation to repair credit is to have a credit card that you use every month and pay off the entire balance every month.  If that is not yet feasible for you, just knowing these simple steps will get you started as you work to repair your credit.