1. Pay your bills on time
Pay your bills on time, every time. One way to make sure your payments are on time is to set up automatic payments. But, you have to watch your bank balance to make sure you have enough money in your account to cover the automatic payments. Also, if you can afford to pay more than the minimum amount, you can pay off your debt quicker. Keep in mind that people with the best credit scores usually are those who pay off their credit cards in full every month.
2. Don’t get too close to your credit limit
Credit scoring models look at how close you are to being “maxed out,” because the formulas predict that people who are using too much of their available credit may have future trouble with repayment. If you use too much of your total credit lines, you can hurt your credit score. Experts advise keeping your use of credit at no more than 30 percent or less of your total credit limit.
3. Get your free credit report every year
Visit AnnualCreditReport.com to get a free copy of your credit report from each of the nationwide credit reporting companies. You can receive a free credit report from each reporting company once every 12 months. By requesting the reports at the same time, you can determine whether any of your files have errors. By requesting the reports every 4 months, you can monitor your credit files more frequently throughout the year.
4. Read your credit report and dispute any errors
Identity theft and fraud is on the rise, so it’s important to check your credit report and dispute any errors immediately. If you find something wrong with your credit report, write to both the consumer reporting agency and the creditor that provided the information, if applicable, to tell them what you think is wrong and why. Include copies of any documents that support your position. When a consumer disputes credit report information, the agency and the creditor generally have to investigate the dispute and correct inaccurate information.
5. Avoid paying upfront fees to “repair” your negative credit history
There are many places that promise to “repair” or “fix” your credit for an upfront fee but no one can remove negative information, such as late payments, from a credit report if it is accurate. You can only get your credit report fixed if it contains errors and you can do that on your own.
6. Be proactive
First, it’s important that you act right away. You do not need to be behind on your payments to ask for help, and many creditors may be willing to help if you’re facing a financial emergency.
Here’s what to do:
Add up your income and expenses. Look for ways to cut costs. If you can’t find enough to pay your minimum payment, decide how much you can afford to pay.
Call your credit card company. Be sure to clearly explain:
Why you can’t pay the minimum.
How much you can afford to pay.
When you could restart your normal payments.
Consider credit counseling.
If you need more help, credit counseling organizations can teach you more about handling your money. Many credit counseling organizations are non-profit. Before you sign up, ask if you’ll be charged, how much, and what services will be provided. Watch out for for-profit debt relief companies that:
· Charge fees before they settle your debts.
· Give a guarantee that they can make your debt go away.
· Tell you to stop communicating with creditors.
Our next financial fitness course will cover a lot on this subject. Click here to register.