How to rebuild your credit

wallet-2125548_1920.jpg

When certain circumstances arise, your credit score could be affected. Unfortunately, rebuilding your credit score doesn’t happen overnight. It takes time and patience. Here are some tips of how you can rebuild your credit:

Stay on time

You should be paying your bills on time all the time. Don’t mail out your bills the day before they’re due. It has to get to the company at least a day before it’s due, so plan ahead and mail out your payment a few days beforehand. An easy way of staying on time is by doing automatic payments. Keep track of your automatic payments. More importantly, keeping track of your bank account is essential, so that you know you have enough money in your bank account to cover the payment automatically.

Avoid getting close to your credit limit

Using too much of your total credit line can harm your credit scores. When you’re close to reaching the maximum on your credit card, your credit score can be affected. Experts recommend that you shouldn’t exceed over 30% of your total credit limit.

Don’t apply for too much credit in a short time.

If you open up many new accounts in a short period of time, then chances are your credit score will go down. Whether it’s a new card to transfer over balances, or a new store card to get discounts on items, too much credit in a short period of time isn’t the smartest route to take.

Try a secured card

People turn to secured credit cards when they don’t get approved for a regular credit card. Secured credit cards are a tool that can help you establish or build your credit history and are offered by many banks and credit unions. You put an amount equal to your credit limit in an account as a deposit. Unfortunately, fees and interest rates can be high when it comes to having a secured credit card, but having one is very beneficial when it comes to your credit record.

Paying with a credit card

If you’re paying your balance with a credit card, make sure that you pay it off every month. By doing this, you’ll build credit by using your credit card and paying on time for every payment. Paying off your balance fully on time every month will avoid the situation where you’d have to pay finance charges. In addition, it can also help you build better credit.

If you’re afraid that you’ll be late or missing a payment, then think about signing up for text alerts, automatic payments, or even have a calendar that you pass by daily to see when your next payment is due.

What NOT to do when trying to rebuild your credit:

1.      Using a debit card or paying cash.

2.      Using a prepaid card.