The Secret to Rebuilding Your Credit
by Christina Costa
Credit repair is a pretty quick process, but you have to know what it is and how to get it done. Working with a credit repair expert can give you tips and lessons on how to achieve your goals. Credit repair is not a complicated process. Take a look at your credit report, the content there combined with your scores will give you everything you need to know.
Just make sure you work with a company that looks at the positive and the negative. Of course you want to clean up the negative marks on your credit, but don’t forget that you want to also build up positives on there as well.
Let’s say I am a lender, and I have your credit report in front of me. First of all I am going to take a look at your scores and this will help me decide how much money I am actually going to lend you. Your credit score is always going to be a deciding factor. That is why with credit report you really want to work on raising your score.
It is important that you understand what revolving credit accounts are. If all of your accounts are closed, you need to work on having open accounts. If your credit is so bad that you are unable to apply for unsecured accounts, go ahead and apply for the secured.
Contrary to anything you might have heard about secured credit cards, they can help you repair your credit. Even if you get them for a very small amount, your credit can benefit with the proper management. Make sure that you are paying all of your accounts on time. This is important, but even more so is understanding the ratio of your balance and limit on the cards. Credit cards will have an impact on credit repair, mainly due to the balances you carry. There are five ratios that will change your credit score. 20, 40, 60, 80 and 100% usage of your balances.
When you have used 60% of your balance you are still in the neutral zone. If you fall between 20-40% that will help to increase your credit score and 80-100% is going to reduce them. This has a huge impact on your credit score, either positive or negative so keep it in mind. You can max out several cards and ultimately knock a few hundred points off your credit scores!
Remember, not all credit cards are treated equal. If you have a line of credit from a store they hold little value towards repairing credit. There is a low benefit to these kinds of cards, but definite harm in misusing them. How many times have you been offered 10% off your purchase if you apply for the store’s line of credit? These cards are pretty easy to get, come with higher interest rates and are used more often than not. Another way to positively repair your credit is new revolving debt. If possible, an automobile loan can help you because it will have a different outcome than a credit card.
Credit cards are helpful in that every month they report to the bureaus and can reflect new usage. Just remember to keep the ratio in mind and those balances fairly low. This will show that you are living below your means and being responsible with your finances. By maxing out your credit cards, this shows that you are not financially stable and can be considered a risk to lenders.
The idea of credit repair might seem like a challenging process. It does require some knowledge and it can be done on your own, although I’d recommend working with a company. There are many reputable credit repair companies who can help you get back on the right track. Professionals do tend to have the expertise and know how to get the job done right.
Just remember stay on top of your credit and make wise choices. Combine that with a credit repair company, and before you know it you will be on your way to lower interest loans and higher credit scores!