Top 5 Essential Strategies on How to Rebuild Credit
Rebuilding credit can be challenging at the beginning. Your goal is to show lenders and credit card issuers that you can make future payments despite troubles in the past.
On the bright side, you can make significant progress even with incremental improvement. You'll find that you have better financial options almost instantly.
Here are essential strategies to help you get started:
1. Boost Credit with Careful Budgeting
Before you apply for a credit card or loan, be sure to track your daily spending and avoid over-the-top purchases.
You don't need to stick to a tight budget, but you should know how much you can afford and stick to that amount. Having a budget in place can show lenders you can manage credit responsibly.
2. Apply for a Secured Credit Card
One of the most important strategies to get out of credit card debt is to stop using credit cards.
A secured credit card, however, is a good option if you're just getting started. The card requires a cash deposit that's equal to the available credit limit. Your deposit becomes your line of credit.
A secured credit card helps you gain a positive payment history to bolster your credit. Get the Citi Secured MasterCard for a security deposit of $0. Get Started
3. Get Closed Credit Accounts Off Your Credit Report
If you're nearing the seven-year mark on an account and you're not carrying a balance, it's time to close the account.
Closing credit card accounts you don't use can help you reduce the number of accounts reporting on your credit report. Keep in mind that closing accounts can have adverse effects on your score, but you'll probably see a significant increase in your credit score most of the time.
Because most people with bad credit have an average of seven open credit accounts, you'll want to reduce that number.
Once you have accounts closed, focus on paying off the remaining accounts. If there are inquiries on your credit report, pay off the accounts so they are no longer reporting.
4. Make Debt Payments on Time
Making payments on time is another important way to rebuild your credit.
Student loans, auto loans, mortgages, and credit cards are the most important creditors to pay on time. Paying on time every month will help your score quickly.
Learn how to set up automatic payments for bills that come due regularly. If you have an account that isn't auto-debited, you should make it a priority to make payments on time.
Set up automatic payments for bills that come due regularly. If you have an account that isn't auto-debited, you should make it a priority to make payments on time.
5. Keep an Eye on Your Credit Report
You should check your credit report once or twice a year for errors, omissions, or signs of identity theft. You may check your credit report for free each year at AnnualCreditReport.com.
Beware of credit repair companies. The Federal Trade Commission warns that many companies claim to be credit repair companies that charge high fees up-front for services that don't actually help.
Getting back on track with your finances is a long-term process. Even if your credit history is bad, you can rebuild your credit. However, you'll want to work at it slowly.
Boosting your credit score can take time, but it's a worthwhile endeavor if you want to gain access to better financial opportunities.
Hometown Finance has been serving the financial needs of Murfreesboro since 2001. We believe in the value of strong relationships–especially in times of need–and approach lending through an understanding lens.
We believe you can’t always judge a book by its cover when it comes to past credit and will never turn any applicant away. If you need a personal loan for bad credit in Murfreesboro, please call to inquire today!