Cleaning up Bad Credit,
Keeping Good Credit, and Restoring or Fixing Credit Scores
I could not decide whether to have this page named cleaning up
your bad credit or keeping good credit to make sure you dont have
to fix bad credit. They both seem to help out in the same ways if
you know what to do once you have bad credit then you will stick
to your credit guns and not get bad credit.
TIP #1 Order
a copy of your credit report at least once a year from
each of the three credit reporting companies to stay on top of changes
to your credit profile and to check for identity theft.
TIP #2 Search for a
Credit Card to help you build a credit rating
Since your credit score will affect whether you can get loans and
the rates you'll pay on your loans, dictate your insurance rates
and sometimes your eligibility to rent an apartment it is good to
keep your credit report record polished and clean. Here are a few
tips for a clean credit report:
- Pay your bills on time. Yes that means credit
cards, mortgage loans or rent payments. Late payments make a huge
impact on your credit history just behind bankruptcy or tax liens.
Establish credit early in life. Preferably while in college or
high school start applying for credit cards but keep them locked
up so you will not be tempted to use them. Make sure they are
clean and active contributing to giving your credit score a boost.
Leave your credit card at home when you go to the mall just use
it for necessary expenses and pay it as soon as you receive the
- Set up automatic monthly payments for gas,
water, and electric utilities and telephone services on a credit
card account or bank account so you will not accidentily miss
- Budget your bills and creditors. Not a hard
task to do once you get used to doing it. Start out with a financial
software program or some easy excel spreadsheet. If you are not
computer literate then jot down on paper every time you spend
money on your credit cards, how much per month you will send off
to lenders, and calculate your income minus expenses. It does
not take an accounting major to do this.
- Watch your credit card expenses closely and
do not max out available credit on credit card accounts. Lenders
will turn their noses up at someone that has trouble managing
their finances. So we always advise you to keep your credit cards
to a minimum of one or two. Maintain a small number of credit
cards and close unused accounts. Creditors look at your potential
for going on a spending spree and falling too deeply into debt.
The more credit cards you have the larger your debt potential.
- Contact your card issuer immediately if you
are unable to pay your bills on time, or if you have found an
error in a bill - make sure all statements are in writing. Also
contact them if you have a late fee that you feel you were just
a few days late or so, they will normally take it off out of goodwill
to keep you as a customer. Keep in contact with them regularly.
- Don't apply for too much credit in the same time period.
Applying for too many loans or credit cards at the same time can
hurt your credit score. Each request for your credit history other
than your own request reduces your FICO / Beacon score. That is
why we recommend one search partner to find you the lowest
rates for mortgages or credit cards.
Other than that you don’t need to keep applying unless you
wait a few months after you have given one lender or bank your
SSN number. Creditors may assume that you are either applying
for too much credit because of financial difficulties or taking
on more debt than you cannot repay
- Be consistent when filling out credit apps
to ensure that everything is recorded in a single file, as opposed
to multiple files or someone else's file. Watch out for inconsistencies
in use of "Sr." and "Jr."
- Check your credit reports for errors or inaccuracies.
Get a free credit report!
- Stay on top of any legal matters involving your credit.
If a business threatens and sends you a letter for a past due
hospital bill but you are waiting on the insurance company to
pay for it then make sure they do not report that late bill to
your credit history and reduce your score. Contact a firm such as Lexingon
Law if you have any problems with this.
Also remember to keep your debts reasonable. Financial experts
say that, as a rule, nonmortgage debt payments should not exceed
10 percent to 15 percent of your take-home pay each month.