Stated by different credit repair companies in Dallas Texas, it’s true: household debt is up again and has been on the rise since 2013. In fact, as of March 2018, the total household debt was $13.21 trillion. With that much debt, it’s no wonder that many Americans suffer from bad credit.
If you’re reading this, then chances are you’re one of those indebted Americans, and you’re not the only one.
The two most common reasons people find themselves with bad credit is foreclosure and bankruptcy. Other issues include late payments and charge-offs, but even with these problems, people can rebuild their credit with a little hard work and planning.
How To Build Up Your Credit Score
Before you think about building up your credit, you need to know where you stand, and that means getting your credit score. You can get your report and score for free, and the first thing you should do once you get it is to make sure there are no inaccuracies. If you see anything that looks wrong, contact the major credit monitoring bureaus: Equifax, TransUnion, and Experian to discuss. Once everything seems good, it’s time to get down to improving your score.
Get Payment Up to Date
Experts say that 35% of your credit score is based on making your payments on time. So, even if you have a history of making late payments, you can improve your score almost immediately merely by making your payments on time from now on.
Credit to Debt Ratio
Another black mark on your credit report comes from your credit to debt ratio. You can calculate your ratio by dividing your card balance with the amount of credit available. Experts recommend keeping your ratio below 30% to prevent your credit score from taking a hit.
Pay Down Bills
Paying the minimum on your credit cards and loans is getting you nowhere fast. They key to getting a better credit score is to pay your debt off quickly, and the way to do that is to pay more than the monthly payment.
Avoid Closing Accounts
If you have an older credit account, you might be tempted to close it if you’re not using it, but that’s a mistake because part of your credit score is determined by how old your accounts are. If you have an old account with a history of good payments, closing that down erases that history.
Diversify Credit
Lastly, don’t keep all of your credit in one area, such as credit cards. Instead, have a mix of loans, credit cards, and other accounts.
Be Careful With New Debt
When rebuilding your credit score, it’s essential that you not take on new debt quickly. A bunch of “hard pulls” to your credit in a short time frame hurts your credit score.
Almost everyone has found themselves with negatives on their credit report now and again, and for some, it might seem hopeless. But remember that with some determination and diligence, you can start your credit restoration in no time.
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