We’ve all made financial choices that were not in our best interest. The best thing you can do today is focus on the future. Here are smart ways to restore your credit and get you on the path to financial freedom:
- Pay bills on time. If you’re wondering who gets paid first when there are a line of creditors, choose to pay your rent/mortgage (you need a place to live), utilities, car payment, and at least minimum payments on open credit card accounts. Missed payments are extremely damaging. Depending on your current score and report, just one 30-day late could drop your score 45-110 points.
- Leave good debt on your credit report. Creditors want to see good debt that has been paid off such as a car or student loan. By the way, it will never help your credit store to close a positive open account. Also if you don’t use an account at least a few times a year, the creditor may close it on you.
- Use credit responsibly. Credit utilization – the ratio of your credit card balances to your credit limit – is a heavy component of your score. It really doesn’t matter if you use your full credit limit during the month; the key is how much you pay off when your bill is due. You should pay your balances down each month to less than 30% (ideally >10%) of your limits to maximize your credit score.
- Monitor your credit. Monthly monitoring can be done through CreditKarma.com – a FREE service. The service will alert you when there are changes in your report. Also pull your credit reports annually through annualcreaditreport.com. These reports are much more detailed than any monitoring services and should be reviewed carefully. If you find something erroneous, call Go Clean Credit and we can help resolve the issue for you.
- Identity Theft Protection. Utilize a free or affordable service to monitor if your identity has been stolen. The sooner you know, the sooner you can clean up your credit. Go Credit Credit can recommend steps for your specific situation.
- Secured Credit Card. If you cannot qualify for an unsecured card, contact us for a recommendation of a good secured card. We monitor these cards all the time and know which ones are the best. You will make a deposit and the bank will give you a credit limit of that amount. Just as you would with unsecured credit, use it wisely as described above. Good, established credit card payment history is essential to improved credit scores.
- Credit Builder Account. Establish a credit builder account like the one offered by BMO Harris Bank or Bank of Arizona. You will make payments against a CD and at the end of the term, you get the amount of the CD plus interest. The bank will report your payments to the credit reporting agencies just as they would for a credit card. While installment accounts are not as important to score as revolving (credit cards), they are still very helpful.
While you’re working on establishing your credit, the team at Go Clean Credit can help you clean up the past. We are experts and understand impacts of both positive and negative credit history. Contact us today to get started!