Find steps you can take take to repair your credit.

Your personal credit rating and scores are more important than ever in today’s economy. It can impact someone’s job prospects, ability to borrow money, and much more. Your credit score is used and referenced for any loans or credit cards you apply for, landlords, insurance companies to determine your premiums, and it is also used by some employers before they will even hire you. Here are 11 steps you can take yourself and how you can improve your credit ratings.

Steps how to improve credit scores

1. It all starts with reviewing your credit reports. There are three bureaus and you need to review reports from them, and you should take a look at all 3. The bureaus are Equifax, Experian and TransUnion. Look for any open or closed accounts that aren’t yours, old bankruptcies that linger as 'due' long after they have been resolved, inaccurate reports of late payments made, incorrect name variations, bad addresses or employment information that is over 4 years old. Examine them for any other negative information that is older than 7 years. Any of these may lower your scores. Be sure to contest and dispute any errors that you find on any of the credit reports.

2. Credit ratings are very sensitive to how much of the total available debt that you can take out that you are using. For example, using 30% of the total available balance on your credit cards will minimize the impact to your credit scores. However, if you want to have the highest ratings, you need to keep the balances on your credit cards and other loans to under 10%. In addition, the three major credit bureaus evaluate all available credit limits that you have on all credit cards to your name. So if you have a large number of loans, credit cards, etc., you may be perceived by the credit bureaus as a higher risk due to having access to a large amount of credit cards. So, reduce the number of your credit cards if you fall into that category.

If you already have several different cards or outstanding loans to your name, and if they have with low balances on them, strongly consider transferring the balances funds with an eye to the 30% rule and the goal is to reduce the total number of credit cards that you have access to. Explore a transfer or consolidation, and find the best credit cards for these types of balance transfers.

3. Set up automatic payment plans for paying your monthly bills, credit cards, and loans. Paying your credit card and other bills on time is critical to establishing good credit and improving your scores. Many banks and other companies provide online bill payment programs and other ways to pay bills on time. These plans will insure that you won’t miss paying a bill or debt, as a missed or late payment will ultimately hurt your scores.





4. Maybe this is common sense, but to have good scores you must have access to and be actively using some type of credit. In other words, if you have no loans or credit cards in your name then your credit scores are probably zero. So build some type of history.

Credit cards, retail cards, rent payments, and also gas station credit cards can help you establish a score. If you think that by using a credit card the temptation to live beyond your means will concern you, then just get a secured card that allows you to build credit. There are some services that consumers that can use but will act as a debit card on your bank account, so you can’t splurge.

5. Be selective when closing credit card accounts. For example, if you close an account with a balance still on it, it will lower your credit score until you pay the balance off in full. Another example that will not improve your scores is if you have had an account established for a long period of time, with a good timely, payment history, you may do more harm than good to your scores by canceling it. Instead, consider transferring the balance to circumvent changes by your current issuer.

6. Maybe the best way to improve your credit ratings is to is to pay down the unpaid debt and any loans you owe money on. If you do have  balances on your credit cards, spread out the debt over multiple accounts. If you open new lines of credit, that will create inquiries from the companies you are applying to, which can impact your scores. However that impact will be offset by the benefit of low balances on your cards, assuming that is possible. However, sometimes there is just too much unpaid credit card debt involved to pursue this tactic. If you are already close to the total limit you are allowed on several cards, it will turn out to be not the best idea to apply for additional credit as it will do more harm than good to your overall rating.





7. Unfortunately in this economic climate credit card issuers and banks are reducing limits, adding fees, and increasing the interest rates on cards dramatically, leaving the consumer with a balance over the limit and a higher monthly payment on their bills when they can least afford it. The higher dollar amount of the bills, if people struggle to pay them, can be a disaster for a consumers credit scores and ratings.

If your bank, credit card issuer, or lender changes your terms or adds fees, try to negotiate with them as banks are more open to negotiation on credit card bills. If the issuer is unwilling to reverse the changes to your account, then take your business elsewhere to another company, as a number of banks are always looking for new customers.

8. Never allow a disputed bill or debt go to a collection agency. A bill going to debt collection will significantly damage your credit scores and it will be shown on your reports. And to make matters worse, when an account you have is referred to a collections agency, the black mark on your credit can take years to resolve. If you are faced with this, find how to get help from debt collectors.

Just allowing one bill to go to collections can result in you then needing to pay higher interest rates on all forms of credit in the interim as well as future. You will pay more for your mortgage, loans, car payments, and more, and the higher interest rates could last for years.

9. Keep in mind that while you are repairing your credit yourself, it is not easy. It takes a significant amount of time to repair and to also be updated on your reports. The 3 credit bureaus only update their reports but once a month. When you pay off a bill or a liability, that company or individual you paid then has 30 days to report it to the bureaus. Then, to add even more time to the process, the credit bureaus then can take another thirty days to update your credit, so the process takes time and be patient.




10. Use the services of a credit counselor or debt management plan. They can support and guide you through the process of paying off debt, bills, and offers tips on how to improve your score. Look into non-profit agencies, as sometimes their services will be free of charge.

11. If you have no other options but to go thru a foreclosure or file for bankruptcy, you can increase your credit scores significantly over several months of time, but you will need to wait until the negatives drop off your reports before you can access the most favorable rates. For example, 24-48 months is the normal time frame in the mortgage industry before you may be able to improve your scores.

By Jon McNamara

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