5 Action Steps Towards Credit Repair

5 Action Steps Towards Credit Repair

This post is sponsored by Lexington Law Firm! Thank you! It’s companies like this that allows us to keep this website running.

If you’ve ever had an employer, landlord, car dealership or insurance agency  look into your credit history, you know how important these numbers can be. You might not get the job, apartment, car, or insurance that you want because of your financial history. If your credit score is poor or non existent it is much harder to meet your financial goals.

To repair your credit, you have to take specific action steps. Some of them — like taking out a loan — can seem completely counter intuitive. Here are your five action steps, explained so you know how to play the game.

1. Decide To Rebuild

5 Action Steps Towards Credit Repair

Make a clear, conscious decision that you want to repair your credit score. Think about the ways that your poor score is holding you back. Consider the rewards of fixing it.

An example of this might be that you realize your poor score is hurting your job application process. You know that the right job will help you achieve the lifestyle that you desire. You need to know the reasoning behind your decision to rebuild, and then commit yourself to the process.

 

2. Gather Your Team

5 Action Steps Towards Credit Repair

Get the support that you need. Ask a financially responsible friend to help you stay on track, or open up a dialogue with your husband, wife, mom, dad, or a child. Only talk to people who you trust, and who will love and support you as you do your credit fix.

In addition to your family and friends, work with people who know credit repair. Call a credit repair service with excellent reviews and a history of helping their clients manage disputes. It is essential to have an expert on your team.

Experts speak the lingo, and can advocate for you to help you reach your goals. If you work with lawyers, they can help you dispute claims. Credit repair companies can also help you uncover issues of identity theft that have been affecting your credit.

 

3. Save Money

5 Action Steps Towards Credit Repair

One of the biggest credit fix keys is to find ways to save money. This is also the hardest to do if you’ve been living off of loans and credit cards. You need to cut back on your spending, and earn more. You might need to sell a car, pick up a second job, or say no to vacation invites. Use your financial goal as incentive, and rely on support from your team to help you with this step.

4. Take Out A Small Loan

5 Action Steps Towards Credit Repair

This sounds pretty counterintuitive, right? The goal here is to prove that you can responsibly borrow money and pay it back on time. Talk to your bank about taking out a loan, and then make payments perfectly. Look at your next credit report to make sure that all of the payments were recorded.

 

5. Put A System In Place

5 Action Steps Towards Credit Repair

The most common type of credit score, which about 90% of lenders use, is called a FICO score. This number is based on a model that the Fair Isaac Corporation first put out in 1989. The model has changed over the last few decades, but the concept has stayed the same. It is based on your spending patterns on any lines of credit that you have. There are five categories that influence your score:

  • Payment History: 35%
  • Amounts Owed: 30%
  • Length of Credit History: 15%
  • New Credit: 10%
  • Credit Mix: 10%

As you can see, the biggest slice of the pie is your payment history. This means that if you have open lines of credit that are carrying balances, you need to make it a priority to pay on time. Write up a schedule with all of your bills on it. This might be in a computer document that you print fresh each week and post by your desk, or handwritten list in a designated notebook. Make a system today and stick to it. No excuses.

Your credit score changes over time, and it is never too late to rebuild a poor score. It won’t happen by accident — you have to take intentional steps. Decide to start the process, and then stick to it no matter what.

Get support from credit repair experts. Save so that you can make payments on time, and take out a small loan purely for the purpose of showing your ability to pay it back.

This post is sponsored by Lexington Law Firm! Thank you! It’s companies like this that allows us to keep this website running.

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