5 Tips to Help Rebuild Credit Score

If you have ended up with bad credit score in the past few years then you are not alone. It can feel like a helpless situation but with time and a little effort you can reverse the situation and the best time to start is right now. Rebuilding your credit score won’t happen over night, it is a long process and requires patience and discipline. If you are looking to rebuild credit score these five simple ways on how to improve your credit score can help you stay on track.

1: Streamline Your Debts

If you have bad credit and are struggling to stay on top of things it can be easy for a bad situation to get worse. For example, if you have multiple credit cards and loan repayments each month it is easy to forget one and receive another dent in your credit rating, making it harder to rebuild credit score. Think about consolidating your credit cards and personal loans to reduce the number of repayments due each month and to reduce the interest rate. Set up an automatic payment to cover at least the minimum repayments each month to avoid damaging your credit score further and then make extra repayments from every pay check. If you do consolidate your debts then make sure you cancel any cards you consolidated rather than using them to extend your debt.

2: Create a Budget

Chances are you got into this situation by spending beyond your means. If you are spending more than you are bringing in then things will get worse and rebuilding credit will be impossible. Start by noting down your household income from wages as well as other sources such as share dividends or government benefits. Then think through all your outgoings such as rent or mortgage, utilities, cable, cell phone, groceries, automobile costs, travel, entertainment, clothes and so on. It can be hard to know exactly where you spend all your money when looking back at bank statements, especially if you spend a lot with cash. Try creating a spending diary for a couple of weeks or use a spending tracker app on your phone such as Toshl to get an understanding of where your money is going.

3: Change Your Habits

Now you know what you are spending money on, it is time to make some changes. You need to review your budget and find things you can cut out and reduce. For example, perhaps you can use free online services such as Hulu for on demand TV and cancel your cable subscription. Shop around for better deals on things you need to keep such as cell phone plans, car and home insurance, utilities as so on. Try looking for discount coupons for products you would use or switching to cheaper brands. If entertainment is an area you are spending up on then look for cheaper ways to do things such as eating in more, enjoying the great outdoors and so on.

One habit you will have to change is racking up debt. Take your credit cards out of your wallet and try shifting most of your spending to a debit card linked to your everyday bank account. This will force you to live within your means and avoid clocking up more credit.

4: Clean up Your Credit File

You’re now getting things in order and avoiding the risk of your credit getting worse. The next step to rebuild credit is to clean up your credit file. Request a copy of your credit file and look for any errors such as default or late payment notes which are not correct or unauthorized credit file enquiries. You may be able to request for mistakes to be removed which can speed up the path to financial recovery.

5: Rebuild Credit

The steps taken so far should be putting you in a good position to rebuild credit. Set up automatic payments for all your bills and loan repayments to ensure they always get paid on time. Creating a good repayment record will result in your credit score going up over time. While it may seem tempting to avoid all forms of credit this may not be the best option to restore your credit as the banks want to see repayment history. Safe options to help rebuild credit are secured credit cards or certain prepaid credit cards that rebuild credit. Secured credit cards work by securing the debt against money you deposit with the card issuer. You make repayments each month and the card issuer reports these on time payments on your credit report causing your score to rise over time.

Start your recovery

Getting into debt resulting in bad credit can be very stressful but it’s not a problem that will go away by ignoring it. Grab the issue by the horns and take control of it today. You should control your finances and not the other way around.

Article by Richard from credit card comparison website Secured Credit Cards 4U which compares credit cards to rebuild credit including secured credit cards and prepaid cards from leading US issuers.

source: financialhighway.com

How to Get Better Credit and Increase Borrowing Power

If you want to know how to get better credit, the first thing you must understand is what having good credit means. Learning how to get better credit begins with having an understanding of responsible borrowing habits. Your credit report and the things that a bank will look for when deciding if they want to grant credit to you follows a very simple logic. It really comes down to how much risk your present to them as a potential borrower. Here are some of the things that lenders will look at and they are also things to pay attention to if you are trying to figure out how to get better credit.

Stability is something that affects your credit report, credit score and is something that your bank will consider when determining if you qualify for credit. If you move residences or change jobs, often this is a sign of instability. Most lenders like to see that you have maintained the same employment or residence for three years. Your credit report will list your three most recent addresses and employers. If they are all different and have changed in a short period of time, this will affect your credit score.

How you use and pursue credit is another measure that your bank will use to determine risk and could be an indicator that you need to get better credit. The number of times that you apply for credit in a given calendar year will indicate if you are a "credit seeker". Too many inquiries will reduce your credit score and borrowing power. The rule of thumb is to make no more than 4 applications for credit in a given calendar year.

Having too many credit cards (even if you don't use them) will make you appear as a credit risk. The reason being is because of the "ability" that you have to go into debt. Having credit cards that are close to the limits, at their limits or over their limits is also a problem. It will not increase your borrowing power, will reduce your credit score and will trigger a message to appear on your credit report that states "balances are to close in proportion to credit limits". In this regard, if you want to know how to get good credit; a good rule of thumb is to only spend on credit cards what you can afford to pay in full each month.

Obviously, how you pay your credit cards is important. Late payments will destroy your credit and is definitely not a good way to get good credit.

If you are trying to get good credit and increase your borrowing power, your bank will also look at your cash flow, income to debt ratios, type of income, assets and more. Much of the criteria that your bank will look for are not contained within your credit report. Rather, it is information requested in a credit application and assessed separately from your credit report. Even if you have the best credit, if other this other criteria is not met you will not be able to get credit from many banks.

TrueAssess is Your Financial Report Card - Better than a Credit Report - Find out what your bank really thinks, qualify for lower interest rates, build better credit, plan for major purchases and more. www.trueassess.com

Article Source: http://www.ArticleBiz.com