Life happens and anyone’s credit can suffer. Millions of people were devastated by the most recent economic downturn and have seen their once perfect credit scores crash. It’s a horrifying thing to hear of but when one experiences it, the results are almost traumatic. When people experience this, they want to repair their credit as soon as they can.
Repairing credit doesn’t have to start when people are in a “better” financial situation. There will always be emergencies and things that have to be paid. Some people don’t have a lot of room to wiggle financially for many years. That doesn’t have to stop anyone from repairing their credit and becoming credit worthy again.
Steps to Resolving Credit Issues
People can resolve their credit issues in different ways. Some have been taught for generations while others are newer. No matter the path people take, it is important take action.
Make a Plan and Write It Down
Millions of people say they want to become credit worthy again but only thousands take action. The difference between those people is the time they took to make a plan and write it down. When goals and plans are written, people are more likely to follow those plans. Those written plans and goals serve as a reminder of what needs to happen and a map to do it.
Be Financially Safe
In today’s world, it is easy to buy things online while at home or on the go. Anyone that lives this kind of financial life should be careful. It is very easy to have financial information stolen when people are careless. When conducting business online, people should:
- Ensure they are on the right website (don’t fall victim to phishing scam)
- Shop with a website with an SSL certificate
- Give credit/debit card information in secure locations (not where it can be easily seen and recorded)
- Verify the purchase before submitting
Check Credit Reports and Scores Regularly
It goes without saying that people should do this. To repair credit, people have to know what is broken. The Big 3 gives everyone a free credit report every calendar year and people should take advantage of it. When reviewing credit scores and reports, if there is something incorrectly or doesn’t belong, it needs to be disputed and reported. Most people do not realize they have been the victim of identity theft because they do not regularly check their reports and scores.
Create a Budget and Stick to It
Money is obviously the reason anyone’s credit is ruined. Creating a budget is the only way to manage money successfully. A budget will allow a person to evaluate their bills, what is being paid and when to pay it. It gives everyone a snapshot of their finances every week. A successful budget will have all debts included and a payment for those debts.
Create a Debt Repayment Avalanche
It seems silly to say but it works. When people have multiple debts to pay with limited funds, it is best to create an avalanche. After paying the minimum payments, people should pick one debt to pay off. That is debt should get an extra payment every month. When that debt is paid in full, the same amount that was given to that debt should be applied to another debt. This is a cycle that will help pay off many accounts while on a budget. When all debts are paid, the money that would normally be used to pay bills should be put into a savings account.
Many things can be done to repair credit. The most important thing anyone can do to repair their credit is to take action. Credit reports and scores won’t improve if nobody does anything.