The 10 Commandments of Credit Repair
Religious or not, most people live by a set of rules or guidelines that steer them through life. When it comes to living responsibly, good credit is among the top concerns of the financially-minded. Keep the following commandments in mind as you begin your credit repair journey.
1. Thou Shall Protect Your Consumer Rights.
Your credit report must meet three credit repair standards: First, everything must be FAIRLY REPORTED, in accordance with several consumer protection statutes. Second, everything reported must be 100% ACCURATE. Third, the credit companies must ensure that what they report can be FULLY SUBSTANTIATED and must answer pertinent questions in that regard. Obtain a free copy and review it carefully. Unfair or unsubstantiated information, outdated material, clerical errors, and even a missing account could keep you from the score you deserve.
2. Thou Shalt Not Miss Payments.
If life is a test, are you willing to sacrifice 35 percent of your score? If the answer is no, you shouldn’t hinder your credit repair efforts with missed payments, either. Recommend yourself to future lenders by honoring your current commitments. Strong credit is a byproduct of self-discipline.
3. Thou Shall Utilize.
Excellent credit requires well-honed financial skills, something you are capable of learning. Rather than moving within the credit scoring system, why not initiate some movement yourself? Discover how to raise your credit score by sharpening your credit utilization abilities. Compare the balances on your credit cards to your total credit limit. Divide your debt you’re your credit limit to find the utilization ratio (e.g., $3,000 in debt /$15,000 credit limit=20 percent ratio). Keep your credit score in fighting form by maintaining a ratio of 25 percent or less. If the time is right, consider applying for a new credit card to increase your total limit and provide an instant score boost. The bottom line: Utilization is ripe with credit repair advantages. Be sure to take an apple from this tree.
4. Thou Shalt Not “Debt Surf.”
Borrowing money to repay another debt can be dangerous, especially when interest rates are involved. Surfing the highs and lows of debt will land you in credit repair trouble. While you may be anxious to repay a student loan or other personal expense, shifting your burden from one lender to another is rarely the answer. Don’t get caught in a barrel roll of debt—the consequences could drown your credit score.
5. Thou Shall Honor Thy Cosigner.
A cosigner is usually a trusted friend or family member, the type of person who puts their faith in you to manage your finances with care. Why else would they agree to vouch for you, right? Honor their selflessness by accepting their help with humility. Their signature is a vote of confidence, not an excuse to avoid responsibility. Protect your credit score (and theirs) by paying cosigned accounts with devotion.
6. Thou Shalt Not Rest In Credit Repair.
If you hope to achieve exceptional credit, it may be wise to forgo the “day of rest.” A positive credit score requires continual maintenance, whether you are diversifying your accounts to prove your skills or focusing on debt reduction to raise your score. Credit repair doesn’t happen overnight, and the 800 Club members are always striving for better results. Find motivation in their success and word toward your own credit repair goals.
7. Thou Shall Honor Thy Savings Account.
Although your income is not a factor in credit scoring, a well-funded savings account could protect you from credit repair doom. Life is filled with unexpected twists, many that come with price tags attached. If you lose your job and cannot pay rent, an emergency fund will prevent a negative hit on your credit report. If you are attending graduate school, avoiding student loan debt will help manage your debt-to-income ratio. Whatever the situation, it never hurts to keep a rainy day fund on-hand. Begin by saving at least 10 percent of your income.
8. Thou Shall Prove Thy Worthiness.
Trust is earned over time, usually in the form of consistency. In fact, a steady credit history accounts for a whopping 15 percent of your credit score. If you want to walk through the pearly gates of creditworthiness, prove your caliber by keeping your credit report blemish-free. Purity is a valuable commodity.
9. Thou Shalt Not Covet Thy Neighbor’s House.
This one is pulled straight from ancient text, and for good reason. Envy is a nasty disposition across the board. Not only does it make you a bad neighbor, it paves the way for bad decisions. Sure, everyone has moments of wishing they could walk in someone else’s shoes, but relying on credit is not the way to secure a better life. A good rule of thumb: If you cannot write a check to buy it, then you cannot afford it. Don’t be tempted to live in a world of insatiability. Take pride in what you have and stop comparing yourself to other people. Confidence breeds practicality.
10. Thou Shall Honor Thy Credit Repair Goals.
Self-imposed rules can be the toughest to follow, but they are also the most rewarding. Regardless of your higher power beliefs, you should believe in a higher standard of living. Only you can change your life. Why wait another moment?