6 Steps to Rebuilding Your Credit
According to financial experts, the following are six essential steps you should take to start rebuilding your credit:
- Take a look at what money you have and track your spending–write everything down–so that you can make the necessary changes to free up cash.
- Create a realistic budget and spending plan. Don’t spend more than you can repay, and pay more than the minimum amount due on your credit cards.
- Rank credit card bills by interest rate, and pay off the bill with the highest interest rate first. If yon have established a three- to four-month history of making payments on time, call the credit card company and ask them to lower your interest rate.
- If you must carry a balance on your credit card(s), keep it at least 40 percent of your credit limit. If your maximum is $1,000, try to carry a balance of $400 or less.
- Check your credit report at least once a year, more often if possible because many financial experts recommend that you inspect your report every three months. Make sure there are no mistakes. You can’t know where you’re going if you don’t know where you’ve been.
- The moment you know that you have a problem making your monthly payments, consult a financial planner or reputable credit counselor. “It’s important to get help when your gut tells you that you’re feeling uncomfortable about your finances,” says author Bridgforth, whose most recent book, Girl, Make Your Money Grow!: A Sister’s Guide to Protecting Your Future and Enriching Your Life, was written with Gall Perry-Mason. “If you tap in to what is going on in your gut, you’ve taken action long before the creditors will.”
- Source: Summarized from “Steps to Rebuild Your Credit,” Ebony, Mar. 2004
