7 Tips for Rebuilding Your Credit

If you’ve been through a financial challenge you know that your credit record could suffer. There are no shortcuts or secrets when it comes to rebuilding your credit. Rebuilding can be harder than starting from scratch and it takes time. This is because you’re trying to show credit card issuers and lenders that you can still be trusted. 

Sometimes your credit score might not be as bad as you think, but it’s important to know where to start. Debt consolidation companies such as Priority Plus Financial and other financial institutions offer free credit score checks. Checking your credit score will allow you to set some achievable goals for yourself. Here are a few steps to help rebuild your credit.

1. Pay your bills on time, every time

This means you should pay the company by the due date. If you know that the transaction takes much longer to reflect with the company you owe, always make your payment a few days earlier than the due date.

2. Try a secured card

If you don’t qualify for a standard credit card you can always try a secured card. Many credit unions and banks offer secured credit cards and in this case, these cards have a credit line that starts small. Here, you’ll commonly deposit an amount that’s equal to your credit limit in an account. 

As you show your credibility by paying on time, your credit limit could be increased and your deposit refunded. Interest rates and fees can be high for secured cards, but using one ensures you can establish a great credit record.

3. Always pay off your balance

If you pay with your credit card, always pay your balance off every month. You can rebuild your credit by using your credit card and paying on time. Pay off your balances to avoid paying any other charges, like interest fees. Paying off your balance also means you can build better credit without carrying over balances. Paying off is also a system that helps to keep you from getting closer to your maximum limit.

4. Review your credit report

Check your credit report and amend any errors immediately. Your credit report will show your history of borrowing and loans. You can always get a free printed copy on each of your credit reports every 12 months. Viewing your reports online is another option that allows you to do it more frequently and this means you can monitor changes in your credit more effectively. 

If you find any incorrect information that could be affecting your credit score, file a dispute with the credit reporting company and the company which is the source of the information.

5. Avoid getting too close to your credit limit

Maxing out your credit card also affects your credit score. Don’t get too close to your credit limit. If you use too much of your credit limit it affects your score. Experts advise that you use no more than 30% of your total credit limit while others recommend 10%.

6. Don’t apply for too much credit

Avoid applying for too much credit in a short amount of time as your credit score may go down. Avoid opening several new accounts at once. This also includes getting a new card to transfer balances and even retail store accounts.

7. Keep the progress

Credit scores are based on your overall performance in paying your bills. You could consider getting credit monitoring tools. These come in handy as they give you an alert when there are any changes in your credit report. They can also show you your credit score allowing you to keep an eye on your progress.

How long will it take? 

Rebuilding your credit isn’t something you can do overnight; it takes some time. How long it takes to rebuild your credit will depend on your circumstances. Factors such as your current score and what affects it all play an important role in how long it will take to rebuild your credit.

As you work on rebuilding your credit, the negative factors lessen over time. Being patient and creating good habits mean that you can eventually pay off any debt in the long run. Doing your research and understanding the different options available to you will make the journey easier. Using credit cards in rebuilding your credit comes highly recommended. Secured cards are also another option to consider just in case you don’t qualify for a normal credit card.