Understanding the countless factors that affect your credit score can seem overwhelming. The only way to improve or establish your credit score is to start making small changes today.
Secured credit cards
Do you have as little as $500 available in your savings account? We suggest putting that amount in a secured loan or credit card. A secured account means that you are borrowing against your own money. This helps to establish payment history and can help combat negative credit history. Generally, these accounts have very low interest rates. Make sure you send at least 6 on-time payments to make a difference. Ask your credit union how to get started with a secured account now.
Pay everything on time
Paying your bills on time increases your creditworthiness and reflects a good payment history, which is important to creditors. If you have a low credit score, your goal is to take positive strides in increasing your credit score over time.
Reduce balances on credit cards
Avoid maintaining high balances on your credit cards, as it can significantly reduce your credit score. Minimize the accounts you apply for and do not close any accounts while in the process of paying off your debt. Making your payments on time and paying above the minimum payment are all ways to show positive change on your credit report.
Keep in touch with creditors
It is important to keep in touch with creditors when you are making late payments. Giving a promise-to-pay can sometimes keep them from reporting negative activity. Sure, you may not want to answer their calls, but explaining your situation and providing them with a payment date can make all the difference.
Create a payoff schedule
List out your debt balances and interest rates to help create a payoff schedule. Start with the highest interest rates and focus on paying off one balance at a time. To do this, you will want to make the minimum payments on all balances, except the one you are working on. After you pay off the first one, you can move on to the next debt. Remember to focus on line of credit accounts first, such as; credit cards, personal loans, etc. Save the car and student loans for later as they generally carry a lower interest rates.
Rebuilding and establishing your credit takes time and patience. The best way to stay on top of changes to your credit report and address any issues that may arise is to request your annual free credit report . Refinancing your auto loan can also lower your monthly payment to make extra money available to pay off credit card debt quickly.
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