Repair Your Bad Credit

Do you suffer from a bad credit score? Have you missed so many bill payments you think getting a good interest rate on a line of credit is impossible? Well, there’s good news! It’s not impossible to rebuild your credit, even if you have filed bankruptcy! The bad news is, there isn’t a quick fix. It takes A LOT of time to build credit.

Credit is your financial trustworthiness. As with any form of trust, it takes years to build and only seconds to ruin it. So if you do have to rebuild your credit score, what steps are you going to have to take?

Don’t fall for a quick fix scam! You see these type of ads all the time. “Credit Problems? We Can Erase Your Bad Credit History Fast!” Save your money. For the most part, these are scams. The people offering these programs will charge you hundreds or even thousands of dollars for a service they can’t provide. Most will take off with your money and you’ll never see them again. If you really do need help from a knowledgeable professional, find a reputable financial advisor. You will get your money’s worth from a licensed professional.

No more late payments. Late bill payments on anything from home mortgages to utility payments will mar your record even more. Paying every bill when it’s due may not help your credit score improve, but it will make sure it doesn’t fall any further.

Pay off debts to increase your income to debt ratio. The lower your debt to income ratio is, the less trustworthy you appear to creditors. When you pay off debt, that ratio increases, improving your report and score.

Start by paying off credit cards near their max limit. Credit cards tend to have a higher interest rate than any other line of credit. Here’s a quick fix you can use - move cards with low maximum limits to cards with higher maximum limits or lower interest rates. That way you have fewer cards near the max limit and fewer payments to make each month. After your credit card debts are reduced, begin paying more on home mortgages and vehicle loans. The more you own in your financial assets, the better.

Maintain 2 to 6 Credit Cards. Credit cards can show you are financially trustworthy. As long as you don’t max them out and pay them off every month, they will slowly help your report improve.

Try to spend no more than 30% of your maximum credit limit. Any higher shows you may be relying on credit too much. Make sure you live within your means. Pay off the entire balance each month. That being said, too many cards will flash red flags to creditors. Even if you do keep them all paid off, more than 5 or 6 cards may make it appear that you rely too much on credit. If you must get rid of some credit cards, discard the newest ones. Older cards have more history, and more history is always a good thing.

Find someone willing to co-sign. But what if you need a good loan now even though you have bad credit? Co-sign on a loan with somebody who has good credit. This serves two purposes…

1. It saves you money by having a lower interest rate

2. Another line of credit that you pay every month will help your score increase

Give it time. It can take 7 or more years for a blemish to disappear from your report. Some blemishes may never disappear, but by demonstrating financial responsibility and following the steps listed above, you will eventually override your bad cr