There is no perfect way to repair
your credit.Each person's situation is
unique.Some consumers find themselves
in debt because of circumstances beyond their control.Unemployment and medical expenses are a good
example.
A good way to repair your credit
is to improve your credit score.This
means you should have a good understanding of how your credit score is
calculated.
Repayment History
A full 35% of your total credit
score is calculated from your repayment history.If you already know you have a history of
late and missed payments, then this will be one of the primary factors
affecting your credit score.This does
not mean that late payments have the equal effect on your credit score as a
bankruptcy, repossession or foreclosure, but overdue accounts will be listed as
a negative item on your credit.The
ideal way to improve your credit if you are in this situation is to pay your
bills on time.Re-think your monthly
budget and make sure you know the due dates for all of your bills.If you start making your monthly payments on
time, you will be surprised at how quickly your credit score will improve.
Balances vs. Credit Limits
The credit reporting agencies
calculate a full 30% of your total credit score based on the outstanding
balances on your available credit cards.When lenders consider your credit worthiness when applying for a new
credit card or loan, they look closely at how you've handled your past
financial obligations.If a consumer has
several credit cards that are maxed out,
this will negatively affect your credit score.Ideally, your balances should be no more than 30% of the total credit
limit available to maximize your credit score.Good advice for a consumer in this situation is to work on ways to
reduce your credit card balances.As I
stated before, re-think your budget; you may be able to find extra money from unnecessary
monthly expenses that can be applied to knocking down your credit card
balances.
The next 15% of your credit score
is calculated by factoring the length of time the consumer has had credit, or
the consumer’s credit history.The final
two criteria that are viewed when calculating a consumers credit score is the
types of credit the consumer applies for and the amount of times he/she applies
for credit.Applying for a lot of credit
in a short period of time can have a negative impact on your credit score.The best advice for someone in this situation
is not to apply for every credit card deal that is sent your way.
Focus on making monthly payments
on time and paying down your high credit card balances and you will see
significant improvement in your credit scores.
Repair Credit
