Credit Repair: Three Reasons to Look on the Bright Side
1. Positive Steps Improve Your Credit Score
Your credit score doesn't just count mistakes you make. It also counts the things you do to use credit responsibly. Every time you pay a credit card bill on time, you're taking one more step toward building a better credit score. The best things to do are simple:
- Pay all your bills on time. Your payment history is one of the biggest factors in your credit score.
- Pay down your credit card debt to reduce the ratio of debt to available credit. Experts advise keeping your credit card balances below 30 percent of your credit limits.
- Get up-to-date on bills if you've missed any payments to avoid those accounts getting sent to collections.
Credit Repair: You Can Start Now
2. Bad Marks Fade with Time
Your credit score gets docked for negative deeds, such as missing a car loan payment or settling a credit card debt for less than you owe. Most negative items stay on your credit reports for about seven years, except for Chapter 7 bankruptcy, which stays on your reports for 10 years. Sure, that sounds like an awfully long time, but the good news is the impact of those missteps lessen with time. A late payment you made two years ago will have much less impact than a late payment made last month. So don't assume your credit can't improve until those items have disappeared.
3. Help Is at Hand
A reputable consumer credit counselor can help you evaluate your financial life, revamp your budget, and work with creditors if you're in over your head. Look for a non-profit organization that provides a broad array of services, such as help with budgeting and saving, and avoid services that focus strictly on debt settlement, charge upfront fees and urge you to stop communicating with creditors.
With a positive attitude followed by action, you can recover from money mistakes and improve your credit for a better financial future, including homeownership.
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