Most Effective Steps to Fix Credit

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Whenever people are faced with credit issues or bankruptcy, it’s all too common to want to fix credit as quick as possible.  However, individuals in vulnerable financial positions must be aware of the facts of credit repair.  The most successful way to improve credit is to always pay all bills on time, every time.  Shady credit repair companies offering fast and major improvements to your credit score for big payments should be viewed with caution.  Below, we at Sage Personal Finance have outlined a few of the best and most effective ways to improve your credit after bankruptcy or other financial struggle.

Review Your Credit Report

In our recent post, Keeping an Eye on Your Credit Report, we discuss the importance of closely monitoring your credit report for any signs of unusual activity and errors.  We also offer a few resources including annualcreditreport.com and Credit Sesame, which offers a free monthly check of your credit score and report.  If you find errors, and nearly every consumer will find at least one error on each of the three major reports, be sure to document and dispute the error to the reporting agency.  If the item cannot be verified with the creditor, it must be removed from your report.  Using the tools provided and your own time and attention, you can ensure that you are not being negatively affected by errors and incorrect information on your report.

Pay On Time, Every Time

Did you know that even some utility companies report to the credit bureaus?  Paying all of your monthly bills on time, every time is the biggest step in maintaining and improving your credit score.  If you can’t make your monthly payment, never ignore the problem.  Companies have advocates and programs in place to help consumers and by reaching out ahead of time, you can often keep a negative report from going to the credit bureau.

Open a Secured Credit Card

For many individuals with poor credit, the opportunity to start fresh with credit is unavailable.  Opening a secured credit card gives consumers the option to show solid payment history to potential creditors by actually paying for the card in advance with a refundable deposit.  This option is discussed in more detail in our recent post, Build Credit with a Secured Credit Card.

Open a Savings Account

Opening a savings account shows creditors that you have means to repay debt as well as the responsibility and desire to save for the future.  This is an easy and meaningful step that can make a major difference in your credit score.

Try to Vary Your Accounts

Having a mix of installment and revolving accounts, such as a car loan and credit cards, shows responsibility and financial management.  It’s best to have a mix of a couple different types of accounts.  A common mistake that consumers make is to close all accounts, which has the negative effect of shutting off all available credit and lowering their score.  Maintaining a low account balance on credit cards, paying them in full each month and keeping them open is the best option to increase your score.

In our debtor education course, we discuss more options to manage your finances and improve your financial well-being.  Register today to learn more.

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