Millions of people have promised themselves (including me) that they’d only use their credit cards for an emergency. But did you know you can fix your own credit if you find yourself in a rut?
If I asked you to raise your hand if this applies to you, the majority of the people who just read this sentence would raise their hand.
That’s because most people do not have the intent of falling into debt when they get a credit card. Unless you’re investing.
However, every day people vow to use their credit cards for emergencies only. Yet, life happens and you’re forced to use your credit card and it’s all downhill afterward.
The good news is, you take the necessary steps to fix your own credit and raise your scores with the following 7 tips.
7 Tips on How You Can Fix Your Own Credit
1) Know who’s looking at your credit report.
Make sure you know who’s looking at your credit report and why. This way you’ll know how many inquiries should be reported and dispute all unnecessary or illegal inquiries on your report.
2) Learn the difference between a hard and soft inquiry.
Hard inquiries will affect your credit score, whereas a soft inquiry will not affect your score at all. You want to know how many inquiries are on your credit report at any given time.
3) Look over your credit report very closely for any mistakes.
When you find a mistake, it is important to contact the creditor as well as the credit bureaus (Equifax, TransUnion & Experian) when you’re trying to correct a mistake to fix your own credit. This is to help prevent creditors from making the same mistake twice and save you time by not having to dispute the same mistake again.
4) Take note of where you are getting your credit report.
When you’re repairing your credit, there are multiple places that will offer you a copy of your credit report (and some will offer a free report). However, it’s best if you get your copies directly from the 3 credit bureaus mentioned above.
5) Avoid paying your credit card bills late.
When you can’t afford to pay all your bills on time, prioritize your bills to avoid paying your credit card late. Why? A single medical, payday loan, or utility bill late payment won’t hurt your credit score the way a late credit card payment will. Now, the late fees will hurt your pocket and your feelings, but neither will damage your credit score the same as late credit card payments.
On the other hand. If you’ve missed a few payments, you can fix your own credit by replacing those late payments with on-time payments as quickly as possible.
6) Learning your rights will help you avoid being harassed.
Creditors or collection agencies have been known to lie or engage in illegal techniques in an attempt to get you to pay. Take some time and read the collection agency laws in your area as well as the Fair Debt Collection Practices Act. This knowledge will give you the ammunition you need to shut down harassment.
7) Learn to utilize less than 30% of your credit card limit.
Here’s what I mean. Keep the total balance owed to less than 20% of the total limit for all credit cards. Let’s do the math. Card #1 Limit is $500. Card #2 Limit is $1,000. Card #3 Limit is $1,500. The total combined credit card limit is $3,000. Now 20% of $3,000 is $600. So, you want to keep your balance less than 20% or $600. By doing so, credit bureaus consider how you utilize your credit limit as behavior for being credit responsible.
I hope these tips help you to fix your own credit.
My effort in sharing these tips is to aid individuals and couples who wish to take control of their financial future without the assistance of a professional.
However, if you want to work with a financial coach to help you stay focused as you navigate control of your financial future, you can schedule a free consultation, which includes an audit to see if we’re a good fit for each other or if you can fix your own credit.
‘Til the next episode,
Control Your Financial Destiny