Numbers bombard us everywhere. There is the day of your birth, your kid’s math score, and your social security number. Numbers can be confusing or help make sense of things. You can be assigned a number without your knowledge. Like your credit score. From the moment you buy your first thing on credit, you have a credit score. Whether you know it or not, banks and other financial institutions assign you a number so they can determine your creditworthiness. If you don’t spend wisely, you could have a low score which can deny you things like the ability to get a reasonable rate on a car, home or other large purchase.
If you have bad credit, it doesn’t have to stay that way. There are some steps you can take to move that score up and give you the credit score you need to get a large purchase at a reasonable rate. Here are a few steps you can take to repair your bad credit.
Assess your Situation
The first thing you will want to know is what your credit score is. You can obtain your credit score in several ways. You can find your score on a website called http://www.annualcreditreport.com/ or get a report from one of the big three nationwide credit reporting agencies. You can get information about what kinds of things are affecting your credit score, and what you can do to fix them. A report will also inform you if someone else is trying to use your information to get credit. Knowledge is the first step toward repairing your credit.
Pay Debts Down
We’ve all heard the stories about paying a minimum balance. If you pay the minimum on a credit card or other debt, it will take years, and you will end up paying well more than twice the amount over that period. Think about credit as something you should only use if you know you can pay it off, other than a car or house. Anything else should you purchased with the intent of paying it off within a month. On debts, you already have, talk to your credit companies. They will often renegotiate with you to get some payment on a debt, rather than nothing at all. It is always worth a call.
Keep Balances and the amount of Credit Cards Low
It is tempting to want to have several credit cards for emergencies or to earn rewards. However, if you have several cards that are never being used that can count against your credit score. Use your cards, but if you do, make sure your balances are low or paid off each month. If you are coming close to your credit limit on several cards, your credit score will be lower. Consider consolidating debts on many cards to just 1 or 2, especially one with a lower rate.
When you take these steps, you can lower your debt and raise your credit score. When your score is higher, you can not only get into a home or a car, but also this can lower the interest rate you get on those critical items.