How Do You Repair Your Credit

So how does someone "fix" their credit? It's common sense that making your payments on time and paying back your creditors leads to better credit. But after your credit is damaged severely this process can take the better part of a decade.

So a better question is, how does someone "fix" their credit faster? While nothing is an all in one solution there are a few tips and tricks that will speed up your credit recovery.

First, stop any further delinquencies. What's in the past, is in the past, but continuing to obtain credit and going delinquent on those obligations will insure you have bad credit forever. So you must stop the cycle. The credit you do receive, you must make every effort to pay on time.

Get rid of the reported bad credit that you can. Obtain a free copy of your credit report. There are a few websites that give you it for free such as creditkarma.com. Once you get your credit report, comb over it for any errors, pay close attention to the amounts, dates and creditors. You can then dispute any incorrect accounts. Old credit is especially ripe for removal as they have been sold off half a dozen times and usually cannot be validated easily. Make sure you're truly disputing errors as disputing a valid collection has a habit of cementing it on your report.

Quit getting silly inquiries for credit. Credit inquires stay on your credit for a very, very long time. Each inquiry drops your score between 3 and 6 points. So if you have 10 inquires, your score could be 60 points lower! Only apply for credit when you NEED it. We see inquires for payday loan places, furniture rental, personal loans, time shares, etc. If you don't actually need it, don't apply for it.

You need new credit. You can't fix your credit without proving that you can now make payments in a timely manner. But how do you get credit after having bad credit? One of the easiest is to buy a vehicle. Typically, this is not so easy, but with 40 years of finance experience, our experience means you can get a car loan. The fact that you're required to make the payment monthly means that it impacts your credit greatly, unlike a credit card that can have a zero balance and not require a payment.

Another way to get new credit is a secured credit card. If you look online, there are dozens of banks willing to do secured cards. Secured cards are "secured" by a deposit from you i.e. you give $500 to the bank, they give you a credit card with a $500 limit. Over time they will return your deposit once you have proven yourself or increase your limit. Be careful, some secured credit cards prey on those with bad credit and bleed you dry with fees. Look to local credit unions first.

And now for a nice loophole, the authorized user. When you have a credit card, you can put others on as authorized users. This allows others to use their credit card. It also gives the authorized user a duplicate of the credit the original credit card owner has. So if your mother puts you on her card that she has had for the last 15 years, you aquire the credit on your report for that card over the last 15 years. If you have someone that trusts you, you can ask them to add you as an authorized user on their credit card accounts. Adding just a few of these can make a huge impact on your credit.

What about credit unions... Credit unions are locally managed banks, they are much more forgiving than national banks. When you decide to get serious about credit repair, make a small deposit in a credit union to open an account. Also, use the credit union to acquire your secured credit card. After a year of car payments, having a bank account with a small balance and having a secured credit card with them, you can then inquire about refinancing your auto loan.

Refinance your car for double credit! After following these steps (you bought a car from us, then opened the credit union account and got a secured credit card right?!) apply for a refinance with your credit union. They will more than likely approve you and lower your interest rate drastically. This does a couple things for you. First it pays off your car loan and gives you a paid trade line for a car loan. Second, it opens another car loan trade line (now it shows that you have 2 cars that were/are being paid well). Third, it drops your payment because your interest rate drops.

Credit affects your life drastically. Your car insurance, house, rental, job, car loan, type of car is all reflected in your credit score. Treating your credit with the respect it deserves can improve your quality of life drastically.

#creditrepair #credit #finance