If you have missed payments, then understandably, the consequences of this will be playing on your mind – the concern of having a low credit score can be an all-consuming concern that might make you want to bury your head in the sand; indeed, it can lead to a state of emotional paralysis because sometimes the fear of looking under that stone to see what’s there is more scary and stressful than picking the stone up and checking it out.
The thing with credit report is that they are a bit like getting a medical check-up; in that, it’s better to know where you stand and be in an empowered position to deal with the situation – where you are able to resolve issues – rather than have them spiral out of control.
Rebuilding your credit history is, of course, a journey that can take some time; similar to losing weight – it’s not going to happen overnight, but the best time to get started is right now. This article doesn’t provide a step-by-step guide to rebuilding your credit report, and if you want further assistance with this, using a service such as repair.credit can be helpful in navigating this journey. Instead, this article looks at three universal principles that will help you get your head in the right place to embark on this journey.
- FIND OUT WHERE YOU ARE: CHECK YOUR CREDIT REPORT
The first step is to check your credit report, as until you do this, you aren’t in the empowered position to take the necessary action required to start repairing your credit score. The first thing to look out for are errors; some credit reports contain many errors due to simple administrative mistakes or more complex issues such as identity fraud; be sure to check there are no late payments incorrectly listed for any accounts and dispute any errors you do find with the credit bureau.
- DAMAGE MANAGEMENT: GET BACK ON TRACK
If you have missed payments, then stop worrying about this – the damage is done – all you have control over is the current moment which will directly affect what happens next; and the best thing you can do moving forward is to ensure your bills are paid on time.
It can feel overwhelming, once you’ve fallen behind to get back on track, and this is when most people start drowning or burying their heads in the sand – they let things spiral out of control rather than addressing them. The trick is to start paying off your bills and get up to date, even if that involves negotiating payment terms so that no further damage is done to your credit file – and then stay on track. If you have a few red crosses, then the remedy to that is to create many more green ticks; there is no remedy in burying your head and letting things spiral no matter how tempting it may feel.
- BUILD UP YOUR SCORE: USE CREDIT CARDS
There are many myths around credit cards, but one of the most effective ways to build up your credit score is to make sure you use your credit card each month and pay off the balance in full.
The more you use your available credit, and pay it off, on-time each month the higher your score will be… because it shows a pattern of good behaviour; rather than “no behaviour” at all. The misconception that having no credit is perceived by banks as a good thing is understandable, but financial organisations want to feel assured that you can manage your finances and repay credit on time; they don’t see it as a good thing that you don’t have debt – they see you as an unknown quantity, which from a bank’s perspective, spells out major risk! Use the credit you have available to you – but be sure to pay it back, in full, on time, each and every month.