How to Fix Your Credit

By Nicki Howell

  • Overview

    Having a good credit score is important when purchasing a home, applying for a car loan, and financing other purchases. It will often secure a lower interest rate and make the chances of approval much higher. But many individuals that have credit issues need help improving their credit score. Making a few simple changes will assist in fixing your credit and boosting your score.
    • Step 1

      Make your payments on time. The easiest way to accomplish this task is by setting up automatic bill payment through your bank. Over time, making your payments on time consistently can raise your credit score by as much as 100 points.
    • Step 2

      Pay down your credit cards. When calculating your credit score, companies look at the balance you have in relation to the credit limit. For example, if you have a credit card balance of $100 and the limit is $10,000, this is very good. But if you have a balance of $9,999 and the limit is $10,000, this will negatively impact your credit score.

    • Step 3

      Leave old credit card accounts open. Because closing these accounts can actually negatively impact your credit score.
    • Step 4

      Don't apply for new credit cards because you save 10 percent on a purchase. Your credit score can be negatively impacted because you have too many cards. So keep the number of cards you apply for to a minimum.
    • Step 5

      Set up a repayment plan if you have a lot of debt. You can work with a company like Consumer Credit Counseling to design a repayment plan. Over time, this will drastically improve your credit score.
  • Skill: Moderate
  • Ingredients:
  • Pen
  • Paper
  • Tip: Consolidate high interest credit card debt. Many credit card companies offer balance transfer programs with rates of 0 percent for 6 to 12 months. Take advantage of these offers, and pay off your debt during that time.
  • Warning:
  • Don't file for bankruptcy unless it's absolutely necessary. Having bankruptcy on your credit report can reduce your score by 200 points or more.

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