When you look at improving your credit score, you have to look at the big picture. If you’ve had a bankruptcy, it can stay on your credit report for 10 years, even though your credit history typically only covers the past seven years.
While there are plenty of law firms and companies out there that claim to be able to repair your credit report in an instant, many of them are scams, and can actually hurt your credit. Simply put, the best way to clean up your credit report is to work on it yourself. There is no “magic” fix – it takes time and effort, but in the end, it’s worth it.
Here are a few simple steps to get you started, cut remember, this is not an easy, quick fix. It’s more of a starting point to put yourself on the road to managing your credit successfully.
Step 1. Make All of Your Payments On Time & In Full
The best possible way to offset your bad credit, and the best and first step toward repairing your credit, is making all of your payments on time, every time, and to pay them in full every month. Not only will this first step keep you from falling into the vicious cycle of owing interest and penalties, it will also help you climb back out of debt.
Step 2. Reduce Your Debt
Look for ways to reduce your debt, whether it’s just paying things off slowly, enrolling in a debt counseling program, or joining a payment plan with creditors to whom you are the most in debt. Don’t allow your debt to continue climbing. Instead, actively take steps to clear your debt, and you’ll be home free sooner than you think.
Step 3. Understand Your Limits
This is the third most important step to take throughout your financial life. If a credit card, or bill sounds too high for you, or out of your league, don’t do it! Your two best friends here are your basic math skills and your instincts. If you foresee a problem in the future, there’s a good chance there will be. Only purchase things you can afford, –it sounds simple, but it’s harder than most people think.
Step 4. Periodically monitor your credit report
Negative information about late or missed payments can lower your overall credit score. Monitor your credit report for incorrect information and dispute it when necessary.