t seems like there are all sorts of people offering to “fix” your credit for you. While a quick fix sounds tempting, fixing your credit needs time and patience. You may hear of companies that claim to “fix” a bad credit rating but those companies are likely scams. Anything they can do quickly to repair only works if the information in your credit file is inaccurate. If that is the case, there is nothing they can do for you that you can’t do yourself for free.
These are the three main things that can negatively affect your credit rating:
Defaulted debts. This includes either debts unpaid or sent to a collection agency, including credit cards, auto loans, student loans and medical bills.
Slow payment history. Paying 30, 60 or 90+ days late can impact your credit
Debt to income ratio. This is a comparison of the amount of debt carried and one’s ability to make the monthly payments. If there is too much debt and not enough money to make the payments, it is a strike on the credit report.
The only way to correct a bad credit rating is to change the behavior that resulted in a bad credit rating, and then be patient. By paying all your bills on time and keeping your debt level low, your credit score will gradually improve. Take these steps to begin rebuilding your credit rating:
Resolve to make 2018 your year to a get on a smart financial plan by following these 8 important steps:
SET CLEAR GOALS. Do you have clear plans for retirement, college, and other major life events? If not, define your life goals and then develop your financial plan to get there.
BUILD YOUR SAVINGS. Set up an automatic deposit into a savings account with as much as you can afford to put in the account. You’ll be surprised how quickly a little money can amass into a healthy savings account.
REVIEW YOUR AUTOMATIC PAYMENTS. Thoroughly review your accounts to make sure that you are not erroneously paying for old subscriptions or bills that have already been paid off.
REVIEW YOUR WITHHOLDINGS. If you’re intentionally withholding too much on your taxes to avoid end of the year taxes or to get a big payback from the IRS, that’s not a good practice. Use a tax calculator to make sure that your withholdings are accurate.
MANAGE YOUR CREDIT. Paying off your credit cards and getting rid of those high interest rates is one of the best ways to put money back in your pocket.
REVIEW INSURANCE POLICIES. Don’t insure your 10-year old car like Tesla. Make sure that you haven’t overbought on your auto, life, health and other insurance policies. Review carefully and make cuts where possible.
BUMP UP YOUR 401K. Add a little more to your 401K this year, especially if your employer does a matching contribtion.
GUARD AGAINST IDENTITY THEFT. Monitor your credit reports and statements to ensure that your identity and finances are protected.