Are you trying to dig yourself out of debt and rebuild your credit? If you have made some questionable decisions that have resulted in a damaged credit score, try not to panic. There are some things that you can do to help repair your credit score and get you back on the road to financial responsibility.
Check Your Credit Report Regularly
One of the best ways to stay on top of your credit is to order a credit report at least once a year. This detailed report not only provides every single piece of information regarding your credit accounts, but it can also identify any possible mistakes that could be dragging your credit score down. You can request a credit report from all three major credit bureaus from www.annualcreditreport.com every year at no cost to you.
Steer Clear of Prepaid Credit Cards
Contrary to popular belief, prepaid credit cards are not helpful when you are trying to rebuild your credit. This is a card that you have to pay for. You then place a certain amount of money on the card, much like a prepaid gift card. Unfortunately, prepaid credit card use is not reported to the credit bureaus and therefore will not raise your score. You are better off applying for a secured credit card and paying the balance each month. This pattern of responsible credit use will be reported to the credit bureaus, resulting in a raised credit score over time.
Always Make at Least a Minimum Payment on Time
It can be difficult to dig yourself out of credit card debt, but what you don't want to do is avoid paying your bills. Not paying even the minimum amount each month could cause your credit score to drop significantly. Try to make the minimum payment plus a little more each month to maintain and improve your credit score.
Never Close Your Credit Card Accounts
A common mistake that many people make when trying to rebuild credit is closing their credit accounts as they are paid in full. Resist doing this, as it could result in a lower credit score. Open accounts with a zero balance to increase the amount of credit available to you, which looks great on your credit report.
Don't Overextend Yourself
One reason many people get into debt in the first place is because they are living above their means. This could quickly get you into financial trouble, as you will ultimately have to pay the bills at some point. Before you make any charges on your credit card, think very hard about how and when you intend to pay for it in full. If you don't think you can pay it off in a short period of time, you may want to rethink those large purchases.
When you are trying to rebuild your credit, it is important that you remain vigilant and responsible. It may be a hard road to get to a better financial place, but you will thank yourself in the long run.