Bad Credit?

Here are some short easy steps to improve your credit.

No matter how bad your credit is, there are steps you can take in order to improve your score. Some of the basic steps you may want to take include:

1. Pay all of your bills on time. Late payments (meaning payments that are 30 days late or more) have a negative effect on your credit rating.

2. Reduce the credit card balances you carry. You need to make sure that you are not maxed out on any one credit card. The general rule is to keep balances less than 30% of available credit limit. For example, if your limit is $1,000 then do not maintain a balance higher than $300 on any given month.

3. Avoid bankruptcies, tax liens (a lien for not paying state or federal income taxes or property taxes) and collections. A bankruptcy stays on your credit report for up to 10 years. Collection accounts and paid tax liens stay on for seven years, and unpaid tax liens will haunt you forever.

4. Avoid the 15% off department store credit cards. These cards can seem very attractive especially when you consider the 15% off, however, they have a tendency to drop your credit score. This is because the available line is usually very limited and your purchase needs are not!

5. Seek co-signer on new loan. Ask a family member or friend to co-sign on a small loan or credit card to help you re-establish credit. Make your payments on time.

6. Get a secured credit card to help reestablish your credit. You will have to keep a designated amount of money in an account that will be sufficient to cover your charges. Make payments on time.

7. Monitor your credit annually. Get a yearly copy of your credit report to catch any errors (see 'How to Obtain a Copy of Your Credit Report').


Tips
When you have a friend or relative co-sign on a loan or credit card, remember that that person's credit will be affected by the payment history as well.

Credit-repair clinics and consumer credit agencies arrange repayment plans and restructure payments to fit your budget. But even if the creditor agrees to the plan, smaller payments and skipped payments can still be reported against you. Some credit-repair clinics charge up to $2,000 up front to get the paperwork started and cover administrative fees. Some CCAs are free. You can call the creditors yourself and make these same arrangements for free.

Contact Aimee if you have any questions regarding your credit.

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