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If we only knew when we were young how important our credit is! How many of us say to ourselves “if I only knew then what I know now”? Fixing your credit can be an overwhelming thought, but take a deep breath. If you are reading this you’re already on the right path. You are on the path to making a difference in your life. Researching and reading is the first step to educating yourself. There are many companies that will offer you help to clean up your credit and charge you an arm and a leg. When in reality you can do it yourself. I myself have been through the journey of repairing my credit and let me tell you it’s been a long journey and it doesn’t just happen overnight, but it’s very doable.
First what I did was set up accounts with free credit monitor services such as CreditKarma.com, CreditSesame.com and Credit.com. They also have apps for these website that are very useful to have on your phone. You will be able to get your credit score, and your credit information such as which accounts are open and / or closed. It will also let you know the status of the accounts, whether they are in good standing or negative standing. It is important that you look at every account and ensure that this was in fact an account that you opened and that the balance is the actual balance that you spent. On all of these free website for credit monitoring you can dispute any discrepancies that you may see in your credit report. I will share a little trick that you may or may not know. Because I had such bad credit in my youth due to my report, I had a couple of negative accounts in my credit report. After 7 years I disputed the accounts. – A negative accounts that’s over 7 years old can be requested to be removed from your credit report because it’s 7 years or older. Take advantage of this! It will take a couple of months, but once they clear out those accounts you are on your way to better credit. Remember if you have any credit cards still open but owe on them, DO NOT close the account. Closing accounts can be more damaging than you think. Credit age play a small role of 15% on your credit score, but it’s helps to have good credit age. You want to make sure you have more credit available than what you owe. This is called credit usage, which plays a big role on your score – 30% of your score.
For the accounts that are not 7 years or older, you have to work with them. You can actually call the credit card companies and ask to settle for a lump sum or set up a payment plan with them to slowly pay off the debt. What is vital here is to keep up with your monthly payments on time. Payment history is plays an important role on your credit score, there is a 35% impact. This is the largest credit score variable. Therefore it is crucial that you make your credit card payments on time.
If you do not have any credit cards open because of a low credit score you can start rebuilding your credit with a pre-paid credit card. Many credit card companies offer a pre-paid credit card option. Search to see which one fits best for you. If your score is not that horrible you may be approved for a credit card which a low credit limit and a high interest rate, take it! This will just be the beginning. It is important to understand your credit card’s billing cycle. This way you can ensure you make your payments during any interest free periods. Avoiding to pay interest is not always possible but sure helps!
Stay focused and stay on track, this is not an over night journey. It takes time but you can do it yourself at no extra cost.