Cut the Coffee
Cutting small, recurring expenses is a no brainer to fixing your credit. While some might be easy, like forgoing happy hour every once in a while, others might be more painful, like trading in your smartphone for a cheaper flip phone or only eating at home.
Snowball your Payments
Becoming current on your payments should be your top priority if you are behind. Start with your smallest debt, and once you are current with it, focus your attention on the next smallest, and so on.
Be on time
Paying your bills on time is one of the easiest things you can do to fix your credit. If you have trouble meeting the minimum required payment, see if you can make smaller payments over a longer period of time. Just remember that consistency is key.
Monitor the Minimum
Many financial institutions will forgo monthly service fees if you maintain a minimum monthly balance in your account. The minimum balance is generally $1,000 or $2,000, so building this amount should be one of your first steps on your journey to fix your credit.
Don’t Open New Accounts
You need to pay off your debt to fix your credit, not simply move it around. Rapidly opening accounts as soon as you qualify them is always a red flag and can lower the score you are working hard to improve.
Don’t Close Your Old Ones
Closing out unused credit cards as a short-term strategy to raise your scores can actually hurt you in the long run, as they will still show up on your credit score. Instead, focus your attention on bringing your active accounts current.â€‹
Don’t Max Out
Your ultimate goal should be to use only 10% of your available credit, but dropping it down to 30% or even 50% is a good start. This way, you can show creditors that you can manage your available credit responsibly without maxing out your cards. This complements your efforts to keep unused accounts open
Face the Mortgage Last
While mortgages are technically considered “debt,” they will not adversely affect your credit score unless you are behind on payments. You should turn your attention to paying off your home only after your consumer debt is completely under control.
Building good credit is a long process; it may be several months before you see any improvement, and even then, not as much as you might need to qualify for a mortgage or car loan. Setting incremental goals is a good way to stay focused.
See a Credit Counselor
If things ever feel out of hand, or you would like more personalized advice, reaching out to a certified credit counselor to help you manage and work through your debt to fix your credit is always a good idea.