How to Repair Your Credit: Top 3 Tips
Alan Williams 
There are definitely a few things to keep in mind going forward.
1. Be careful with credit repair services.
Since we just discussed these services, it’s worth sharing some extra advice here.
Namely, to reiterate, the actions they can legally take are no different than what you can
do yourself.
Some credit repair companies will make too-good-to-be-true promises about getting your
credit score up to a certain target and/or charge high fees upfront.
The Federal Trade Commission (FTC) has actually criminally charged some of these
firms, so be wary and do your due diligence beforehand.
2. You can fix it yourself.
Contrary to what some believe, repairing a credit score is something you can take care
of yourself.
Save yourself the hassle and money of consulting credit repair services and contact your credit bureau on your own.
Ultimately, it comes down to filing a dispute.
As with a lot of issues in life, the problem often starts with you.
Although a tanking economy or other unexpected event that causes you to lose your job isn’t your fault, there are things you can do to avoid credit issues.
Polishing your budgeting skills and improving your payment history by paying all the bills on time is already a big step in the right direction.
Secondly, having a large number of credit card accounts open increases the chances of losing track of the money you owe – you may want to think twice before opening that new account.
Opening many accounts within a short time span is in itself seen as a red flag by most lenders, just FYI.
3. Closing your accounts doesn’t help.
If you have multiple open accounts already, closing them may actually backfire.
It would be better to pay them down and then leave them alone.
Sounds paradoxical, right?
The reason behind this is that it will appear as if you have the financial stability to be
able to pay down numerous accounts, say 5, rather than just 3.
Having multiple paid-down accounts open also reduces your “credit utilization ratio”
(your total debt divided by your total available credit), since those accounts increase
your total available credit i.e. the denominator grows larger, decreasing the overall
percentage.
A low (30% or less) credit utilization ratio is a positive factor for crediting scoring models.
Having a healthy credit score is a huge boon.
It makes some of the major decisions in life easier to deal with – from better mortgages for that dream house to lower interest rates for a car loan.
It’s not uncommon to run into trouble here and there, though.
If you do, know that the world won’t end and that there are credit repair options out there to help alleviate the consequences of poor credit scores.
A key takeaway is that you don’t need to spend even more of your hard-earned money on credit repair services unless you feel you really have to.
In the long run, managing your personal finances responsibly is a one-way ticket to a good credit score (and not having to deal with credit repair).
Categories: : finance