Though they may be in the past, the fallout from those decisions will continue to affect you until you have cleaned up your credit report and score.
Building good credit after making some bad decisions is not something that can be done quickly-so beware any company that claims that it can fix your credit.
To get back on track, you’ll just need to demonstrate that you are a responsible bill payer, and therefore a good credit risk. Here are the steps you’ll need to take to get your credit report healthy again:
1. Start by examining your reports with a fine-toothed comb. When you know your credit score is not great, it can be easy to ignore your credit reports and pretend they don’t exist. However, you want to make sure that you are the one who has made all the negative decisions affecting your report. With the prevalence of identity theft, it pays to be super vigilant about your reports, whether you’re on credit cleanup detail or just trying to maintain your good standing.
If you do find inaccurate charges or information, make sure you that you file a dispute with the credit bureau-it will help to improve your credit.
2. Get in touch with your creditors. If you are still in debt, one of the best moves you can make is to work out a way to repay what you already owe. If you can afford the payments on your current budget, then just make sure that you pay more than the minimum, on time, month after month. Doing this for the long haul will prove that you are credit-worthy and will help to heal your ailing credit.
However, if you can’t afford your payments, you will want to talk to your creditors and work out a payment schedule that will allow you to keep plugging away at the debt. It may feel overwhelming to call your creditors to ask for this, but remember that they want to be paid and will want you to work with them, rather than default.
3. Take on reasonable debt once you have paid off what you owe. The sad fact of the matter is that in order to have good credit, you must use credit. This cycle is part of what leads some borrowers astray. But being smart about how much and what kind of debt you take on can help you stay on the right track. Department store cards-which are generally available even to those with spotty credit-and secured credit cards-which ask you to make a deposit to the lending bank for the amount of your credit limit-are two ways to build your credit history without allowing yourself to go overboard.
4. Make a budget and stick to it. Unfortunately, creating a budget often feels like a lost art. It’s certainly not something that all parents teach to their children. So bad financial decisions often stem from the fact that you may not know how to budget. There are many wonderful get out of debt books, but if you find that you’re having trouble going it alone, talk to a credit counselor. These individuals can help you to figure out how to live within your means.
5. Remember that there is a difference between a credit counselor and a charlatan. There are many scams out there that promise to fix your credit. These promises are similar to the ones that claim you can lose 30 pounds in 30 days. If you want to see real results in fixing your credit (or losing weight, for that matter), it will take time, effort, and discipline on your part. Anyone who promises a quick fix does not have your best interests at heart.
Credit repair is a slow process, but there’s no beating the satisfaction you’ll feel in bringing up the score that used to drag you down.