With offers for debt consolidation appearing everywhere lately it has truly become difficult to sort the scams from the legit offers. You may end up taking one of these seemingly valuable offers and end up worse off than you we’re before. So, then what you ask yourself? How are you going to fix this mess by yourself? Well, take a deep breath and relax because it really isn’t that hard.
Now if you are already in a mess then don’t stress too much. You need to make a plan for what you are going to do. Try to do this in a calm state of mind because if you come from a point of emotional distress you will end up emotionally reacting, instead of making sound decisions that make you come out on top. Fixing your credit is really a lot like playing a game. So, when you want to win the game you need a strategy. For this you already know that your objective is to repair the already done damage to your credit score. Now you need to know the factors in play by the people that determine exactly what your credit score is.
If you do not already have a copy of your credit report then you can get 3 free reports annually from the three major bureau’s which are Trans Union, Experian and Equifax. You can also get free credit reports online from a number of sources within a matter of moments. Whichever way you want to get your reports is fine; you just will need them to find out precisely what information is damaging your credit before you can being to fix it.
On the road to your financial recovery one of the main important parts of the game is to make sure you keep up with all your current and upcoming expenses. That means don’t make any late payments from this point on. Do not pay off one of your past debts yet, if that means that you will be unable to make a payment on an upcoming bill because it will only lower your score even more. The reason this lowers your score is because your payment history is one of the largest parts of how your credit score is determined.
However, not all bad history is created equal. For instance, if you have an outstanding debt from 1 year ago and you have another one from 2 months ago, then the most recent is going to affect your credit score most heavily. What this means for you is once you know you have enough to make the payments on all your upcoming expenses then you can move onto step 2.
Step 2 is where you make a list of your outstanding debts in order from most recent to oldest. As you accrue money to pay these off then you will knock them down in this order. This is going to increase your credit score some. The next biggest factor for the number you get on your credit score is determined by the amount of debt you have. If you have a large amount that is okay, because as you pay off the debts from step 1 this amount will be decreased. However, don’t emotionally over react and just rid yourself completely of your debt. It is always good to have a small amount on your credit cards that you pay off regularly. This makes you look like a reliable consumer. Now you move to Step 3 in the credit score game.
Step 3 is based on time and skill. Now that you have successfully paid off your outstanding debts, and have done this in the precise order which they hindered your credit score, you may enter the actual game world. Another big factor, or at least 10 percent, of your score is determined by the types of loans that you have. This means that you can successfully have not just credit cards, but also loans from lenders and banks. These types of loans can be personal, mortgages, or for a car purchase. Please realize that if your credit has been bad in the past it will take a while to make you look like a great candidate to loan money to again. This means you have to keep up with your payments. If you struggle with time management then one suggestion is to print out or buy a calendar. This will be your financial calendar where you write in when your payments are due and when you need to pay and send them in by. If you do this the odds are very low that you will make a late payment ever again. Once this becomes a habit your bad credit will be a thing of the past.
If you are able to go down to the bank that you use for your personal checking and explain your situation to them then you can also do wonders for your credit score. Simply tell them you are trying to establish a history of good credit for yourself and you would like a small personal loan to pay off. This will prove your ability to keep your word and increase your credit score. The more times you do this the more it will help you out because you look like a responsible consumer, which is precisely what lenders are looking for when you really want to make big purchases like a house or nice car.
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