Getting into debt is a problem for many Americans.
The high debt can lead to missing payments on mortgages, rent, credit cards, utilities and other bills. These missed payments will lower your credit score and hurt your credit. American credit can need repairing for other reasons too, such as bankruptcy, liens, tax penalties, divorce and hospital charges.
Whatever the reason for the debt, you need to find a way to rebuild your credit and repair it. Here are the 10 steps you can take with the help of credit repair organizations to fix your problems in 2017.
Start With Credit Report
Your credit report often can have mistakes listed on your report.
About 70 percent of credit reports have problems on them.
The errors can cost you when you are trying to get a loan.
You must review your credit report regularly, at least once a year, to review the errors on your report and fix those errors. Know what could be causing you denials.
If you have missed payments, make sure you get the funds together to become current on your payments.
Your credit will continue to be harmed if you don’t get around to paying those missed payments.
If you are having trouble, you can work out payment plans with creditors to get you current.
After you have caught up on your payments, you need to continue paying on your debts regularly.
Paying on time is important when creditors are reviewing your potential for loans. Payment history is a big factor in determining your credit score.
Having payments automatically deducted from your checking account will go a long way to establishing you as a safe credit liability.
When you start paying regularly on time, you might be able to receive letters of recommendations.
If you miss a payment, you could try to ask the creditor to remove the one missed payment from your credit history.
If you haven’t purchased anything by credit, you will not have a credit history and no credit history means no credit.
To avoid this circle, you should get some type of credit.
Banks often offer student credit cards for those in college. Banks also have those accounts that allow parents to control student credit limits and fees.
You also can ask your bank for a secured credit card, which requires you to deposit an amount equal to your credit limit. Department store credit cards usually are not as difficult to acquire than Visa or Mastercard.
You might even want to go for those financing offers at electronics or furniture stores.
Upgrade to Unsecured Card
When you have established that you will make monthly payments on time, you can ask to go to an unsecured credit card.
Usually, you have to wait several months before this option is available to you.
Just remember that you need to continue with the on-time payments.
You also need to remember to set a financial limit on your spending. It is a good idea to use the card for emergencies only.
That way, you know you will have enough money to make the payments. You should stick to a budget every month.
Pay Down Maxed-Out Cards
Companies issuing credit like to see on-time payments, but they also want to see low balances.
You need to chip away at the high credit card balances to a level that you can handle and that creditors will see as not daunting.
When you have high balances, you will have a lower credit score. You also will have trouble making payments, which will lead you to miss payments.
Then, the circle of debt will continue. Do what you can to reduce those balances to rebuild your credit.
Don’t Close That Account
If you have had a credit card for a long time, it is your advantage to keep that account open.
Otherwise, you could have a negative impact on your credit score and availability.
However, you might find that you have no choice but to close an account. For example, the creditor might close it if you failed to make an effort to pay on it.
The downside is the account is closed, but you still have to pay off the amount and it still appears on your credit report.
You also might have to close an account if fraudulent activity happens on it. Sometimes, when an account is closed for this reason, the creditor will not reopen it.
Reduce the Applications
Every time you apply for a new credit card, your credit score is affected.
Don’t listen to those store cashiers who beg you to open an account with the store.
This is dangerous.
Also, the cashier is doing it for two reasons. First, he or she gets a bonus. Second, the store makes more money on the credit cards than it does on the actual retail sales.
In addition, don’t fall for the online ads that ask you to apply for credit cards. Apply for the ones you truly need.
Protect Against Identity Theft
You might want to consider putting a security freeze on your credit.
That means that until you unfreeze it, you will not be allowed to open any new credit lines.
The advantage is that you are protected if someone steals your identity and tries to open an account in your name.
The disadvantage is that you can’t open an account if you need to so. Security freeze is more effective than a fraud alert. It also would keep you from applying too many times, which will enhance your credit.
Monitor Credit Score
Go to sites that offer free credit score and monitor yours regularly. This will ensure that you are building and repairing your credit as necessary. You will know if what you are doing is working.
With these steps, you will be on your way to being debt-free and wiser about your credit. You will be able to build or repair your credit based on actions that you take.
Usman Raza has been mentored by millionaires from multiple industries such as real estate investing and digital entrepreneurship, his two areas of expertise. Not only that, but Usman Raza continues to network with millionaires and read high-level books/newsletters to stay on the cutting-edge in the internet marketing and real estate investing world.