Efficient credit repair requires attention from multiple angles. Achieving the perfect balance means carefully examining the relationship between income, debt, savings, and more. For those on the path to big changes—marriage, buying a house, sending a kid to college, etc.—a high credit score is paramount. Review the list of what not to do along the way. If credit repair is the path, these actions are the detour signs.
• Rely on a single credit score.
Good credit rests on the shoulders of a single three-digit number, right? Wrong. In fact, the data used by lenders is actually from three credit bureaus: TransUnion, Experian, and Equifax. The bureaus maintain their own credit report and score for each consumer. Depending on the varying degrees of information, your credit scores may differ significantly. If you are searching for complete credit repair, begin by reviewing each credit report and verifying the information. When approving your application, lenders could base your interest rate on your lowest score. Don’t allow an error to keep you from a fair deal.
• Ignore the late fees.
Nearly everyone faces a late payment at some point, but does the bad news end there? If your creditors reported the mishap, the result could be dragging your credit score down. Collecting these types of citations could sink you further into trouble—an issue that could take years to rectify. Don’t let your credit repair efforts end with a paid bill. Spot the negative items on your credit report and verify their accuracy. If their presence is legitimate, contact your creditor and ask them for a goodwill removal. This strategy may prove effective if your record boasts a good payment history.
• Get comfortable.
Go ahead, empty your savings accounts and cash out your 401k. Spend your money carelessly and don’t worry about the future. Zero savings equals zero defense when it comes to emergencies and any unbudgeted spending. This lifestyle leaves you vulnerable to living on credit, a practice that will ruin your score over time. Opt for safety by planning for life’s unexpected costs such as vehicle repairs, or health issues.
• Apply for every line of credit you see. Inquiries are a little-known credit bruiser. Appearing on your report every time a third-party views it, these citations alert you and the credit bureaus of the activity. While one or two inquiries has little effect on your credit score, excessive citations will raise a few red flags. Applying for too much credit makes your behavior seem risky to potential lenders. When the time comes to buy a house or take on a new loan, the bank may shake its head at the inquiries attached to your name. The bottom line: Be smart about letting others view your credit reports. Stay away from credit accounts you don’t need. Why waste valuable credit score points?