The truth is repairing credit overnight is unlikely, even with a certified credit consultant. However, gradually, there are a few ways to fix your credit without a credit repair consultant. Below we’ve listed four ways to improve your credit score.
Contents
- Understand Your Credit Statement
- Pay All Outstanding Statements
- Pay All Outstanding Collections
- Budget Your Finances
1. Understand Your Credit Statement
When you open up your credit statements, you will most likely see terms like “minimum payment” and “statement balance.” Most of us will stop reading the rest of the credit statement after seeing the minimum payment, and this is why statement balances increase the next month.
The minimum payment means the smallest amount of money that you have to pay every month to keep your account in good standing. In contrast, the statement balance is the total amount on your account for that billing cycle. Most people pay the minimum payment and call it a day. The problem with only paying the minimum amount is the balance being carried over into the next month. In addition, only paying the minimum will cause an increase in interest charges on the next bill cycle. Thus, there are consequences to only paying the minimum.
Pay your statement balances in full to avoid carrying over balances and interest charges. Paying your statement balances in full will also help boost your credit score over time. If you’re ever in a situation where you can only pay the minimum amount, try to pay a little bit more than the minimum to demonstrate financial responsibility. Still, the best way to repair credit fast is by consecutively paying your statement balances in full!
2. Pay All Outstanding Statements
Payment history makes up 35% of your credit score, which means paying credit card bills on time will significantly improve your credit score by 35%! In contrast, missed or late payments can drastically harm a credit score! That’s why it’s essential to pay bills on time because late or missed payments will impact your credit score. According to Equifax, missed payments sent to collection agencies can stay on your credit report for up to seven years. Additionally, late or missed payments cause late fees to be applied to the next bill, resulting in further debt. Overall, late or missed payments can cause a depletion in your credit score. Thus, making payments on time is essential to avoid bad credit and additional fees.
If your financial situation prevents you from making a payment on time, arrange a payment plan with the affiliated credit company to receive extra time to make a payment. Remember to make the payment arrangement before or on the due payment date, so your credit score is not affected.
3. Pay All Outstanding Collections
If you already have an accumulation of missed or late payments, the only path to repairing credit is by paying all outstanding collection items on your credit report. Outstanding payments on credit reports indicate poor financial responsibility, which affects your reliability to receive new credit lines. Paying all unpaid bills is the best way to actively fix your credit to remove those items from your credit report. If you have an outstanding payment that you cannot instantly pay in full, call the affiliated credit company to arrange payment plans to reduce the total amount into instalment payments.
Also, be cautious of retail companies offering credit cards with 0% interest for 12 months on your first purchase item. In some cases, if you go 12 months without paying for the initial item, you will receive an accumulated interest charge for the 12 months that you did not pay. Thus, make sure to pay outstanding collections to avoid collecting debt in the long run.
4. Use A Budget to Manage Your Finances
One method to repairing credit is by creating a practical budget plan. A monthly budget plan will help you manage your finances by writing out your fixed and variable expenses and monthly income. Identify how much money you earn in one month. This number is your monthly income. Now list out all the fixed expenses in one category and your variable expenses in another. Fixed expenses are necessary recurring payments like rent and credit card bills. Whereas variable expenses are unpredictable expenses like a night out with friends or family. With your two categories, total your expenses and subtract the value from your monthly income. Remember to prioritize your fixed expenses! After subtracting both expenses from your monthly income, recognize the remaining value as money you get to save. If the remaining value is negative, change your variable expenses to ensure you prioritize the fixed expenses while keeping enough money left over to save. Overall, by writing down your monthly budget, you can visually see how much money you spend and save.
The four tips listed above are actionable practices that you can start doing today to help gradually fix your credit score. However, to achieve the credit score you truly want, our team of experienced credit repair consultants at Credit360 can take you a step further than the four tips we listed above. We can make repairing credit as easy as one, two, three through our credit consulting services. One, we review your credit history with you. Two, we identify the negatively effective statements. Three, we work actively to remove the impacting notices. At Credit360, we strive to provide the best services to fix credit while creating the life you deserve.
Written By: Indojaa Sathiyaseelan
