You’ve just gone through a rough patch in your life and now you want to rebuild a sagging credit history. Or maybe you’re starting over, having given up credit years ago and you now have a poor credit rating. It may seem overwhelming at times, but with a little knowledge, time and patience, you can be on the road to credit recovery quickly. Here are three tips to help you get started.
1. Resolve to Pay Your Bills on Time from Now On
It seems like obvious advice, but because payment history is 35% of your credit score, any rehab effort to your credit rating should put this piece of advice front and center. It’s true that, as time goes by, old negative items on your credit report will make less of a dent in your credit score, but this “lessening” of damage typically starts several years down the road. Even one 30-day late payment can have a punishing effect on your credit score, so it’s a good idea to make your best effort to never be late.
2. Get a Secured Credit Card
Secured credit cards are a great way to build credit. How they work: you put down a cash deposit and you’ll get a credit “limit” equal to the amount of the deposit. Most secured credit cards report your payment history to the credit bureaus (make sure to verify this with your specific card issuer), so using a secured credit card can be a relatively quick way to get your get your credit back on track. It pays to do some looking around — there are secured credit cards that have comparable interest rates to unsecured credit cards.
Be careful not to max out the credit card — which may be difficult to do if your credit limit is $500 or less. Credit utilization (the percentage of your credit line that you are using) makes up 30% of your score, so it has a big impact. Experts recommend keeping your credit utilization around 30% — ideally 10%.
3. Hire a Credit Repair Service
While you can certainly do credit repair on your own, working with a professional can save you time and frustration and help get your credit back on track more efficiently. Lexington Law is experienced in working with both credit bureaus and creditors to make sure all the information on your credit report is both correct and verifiable.