Improving Your Credit: 5 Ways You Can Get A Handle On Your Finances

Getting a loan can be a challenge for those who have a problematic credit report. There are steps that the average person can take to improve his or her credit. Here are a few tips that can bring a credit score up.

Pay Bills on Time

One of the biggest parts of a credit report is related to the timeliness of bill payments. Accounts that fall more than 30 days overdue can be a big drag on a credit report. A lower credit score can lead to higher interest rates on loan. It can also lead to a person getting declined for a home or vehicle loan. Paying even the minimum amount due each month before the due date can help a credit score soar.

Keep Old Accounts Open

Another part of the credit scoring system is related to how long a person’s credit history is. The age of a person’s credit history is tied to the oldest outstanding account. Therefore, a credit card that has been open for ten years will help you if you keep it open. Closing it would cause a drop in a credit score. For your overall financial health, you should try to eliminate the credit accounts that you don’t need and consolidate your debt.

Avoid Using Credit

First of all, if you are feeling like you are drowning in your finances, you would be wise to put the credit cards away and use them very minimally. The percentage of credit that a person utilizes at any given time will also impact a credit score. Someone who owes $8,000 on a credit line of $10,000 would have an 80 percent credit utilization rate. Someone with the same $8,000 debt on a $32,000 line would have a rate that is only 25 percent. The latter example would be more likely to have a higher credit score because they don’t ride so close to their maximum.

Write up a Budget

It is difficult to keep up with finances if there is no budget to track income and expenses. There are a number of online options when it comes to drawing up a monthly budget. Getting one up and running can save the need to utilize additional credit and improve scores. One of the very best digital helps for a budget is Mint.com, a free, financial management application. Personally, this is how I manage my monthly budget.

Pay Your Old Debts

Your credit score will greatly benefit from your past payments being made, even if they are late. You may speak with your creditors and ask them for adjustments on the reporting of your payments once they have been made. This will greatly improve your credit score. If you are so deep into debt that you don’t know how to even start paying off your debts try a more strategic approach: Lock down your budget, commit to make every single minimum monthly payment you are responsible for, and put all the extra cash you have left each month toward the smallest debt you have. Repeat monthly until your debt is gone. It takes a lot of commitment, but you can do it and after about a year, you will find yourself accelerating quickly out of debt.

Consult a Bankruptcy Attorney

No one really wants to take this step, but if the situation becomes overwhelming, it may be your best solution. Utilizing a chapter 13 bankruptcy attorney will allow a person to start rebuilding his or her credit and get over a hurdle that may seem impossible.

Keeping a good credit score is imperative for getting the best rates on mortgages and installment loans. Those who are able to follow these steps will be able to improve their scores and obtain the best terms for any loans they might need.

Category: Credit Repair, Debt, Family Finances