Are you completely bogged down with debt?  Are you behind on payments, and feeling desperate because you don’t know what to do to protect your credit history?  Here are five easy ways for you to take action right away to either start to improve your credit or protect your credit from getting any worse.  

1) The first thing you should do is get a copy of your credit report from all three credit bureaus and check to make sure all of the information found there is correct.  It’s possible that you could find that payment information is incorrect, that balances are reported incorrectly, or the debt you paid off is not showing as repaid on your credit report.  Thanks to federal legislation, the three major credit bureaus are much faster to contact lenders and get credit reports fixed.  They are required by law to respond within 30 days to any dispute you have with something on your credit report.  You will likely find that they get back to you much sooner than that with a resolution, and will work with you if that resolution is still not satisfactory.  

2) Prioritize your debt.  You should list all of the debt you owe and the interest rate that you owe for each on a sheet of paper or on a spreadsheet on a computer.  Once you have them listed, sort them in order by the highest interest rate at the top to the lowest interest rate at the bottom.  You should approach your payment plan by putting extra cash into the debt balance that is at the top of your list.  Try each month to put a little bit extra toward that high interest rate loan.  By paying a little extra on top of your monthly payment, you will reduce interest as well as pay off your balance faster.  Once that debt is paid off entirely, take the monthly payment plus the extra you were paying and apply it to the debt that is number two on your list.  This repayment plan is sometimes called a “debt snowball” and can help you pay your debt years faster than if you just made the minimum monthly payment on every debt each month.

3) Find some extra money each month to put toward your debt.  Whether it’s giving up the gourmet coffee every day, or taking a part-time job, it’s important to find a source of additional cash to put toward your debt each month.  Some families have a second or third income which they put entirely toward their debt repayment plan.  Other people take up an online business which makes them a little extra money each month, and they put all of those funds toward their debt.  A good example of this is selling items on EBay or Craigslist.com.  Tightening your budget is not that hard if you know you are spending extra cash on things that aren’t necessary, like extra meals at restaurants, manicures and pedicures, gourmet coffee, or any number of other similar expenses.  Take a look at your budget and see if you can’t find 5% to cut and put those funds toward your debt repayment plan.

4) Don’t open any new credit.  The best way to improve your credit score and get out of debt is to avoid taking out any more loans or opening any more credit card accounts.  Since everywhere you turn you’re bombarded with applications for credit, it’s difficult to say no, especially if you are having trouble living on your income alone.  Yet it’s important that when you are trying to dig out of debt, you don’t dig your hole any deeper.  You can get your name taken off mailing lists by going to the direct marketing association website.  For one dollar, you can enter your name and address and they will remove your name from all the mailing lists that go out to the major mailers each year.  It doesn’t hurt the environment either to reduce your junk mail delivered to your home.  

5) Be patient.  Recognize that improving your credit score and reducing your debt can take some time.  There are plenty of scams out there that promise to give you a brand new credit history overnight.  Usually this is not only impossible but illegal.  You can take small steps that add up quickly over several weeks or several months, and by following the tips above you can start to see an improvement in your credit score in as little as two months.  Remember that most lenders report to the credit bureaus on a thirty day basis but it can take up to three months for changes to appear on your credit report.  By being patient and focused on your goal, you will find that within six months you will start to see real changes and an overall improvement in your financial foundation.

Tags: fix credit score, fixing credit report, good credit repair, Improve credit report

Categories: Credit Repair