Yep we have all been there. “Let me just charge this Macbook Pro, this pretty dress, the Dyson vacuum cleaner that hangs on the wall and sucks up golfballs to the old JetBlue Amex card and I’ll pay for it later or pay it off in increments.” Then we keep charging and charging and our available credit on that JetBlue Amex card gets less and less until we’ve successfully maxed it out. Then something bad happens financially and we can’t make payments on time or can’t make payments at all. Or perhaps you are like me and naively decided to pay for your entire Fordham University tuition with private loans at the age of 18 only to find out the minimum monthly payments were over $1200 dollars a month. Whatever it is that put your credit in the toilet is fixable. Maybe your credit score isn’t in the landfill and you’d just like to see that 650 score creep a bit higher. Well here is a good start with 5 ways to fix your credit.
1. Get a credit card or a secured credit card. If you are in a position to open a credit card, do it, and be super responsible. Charge your Netflix to it or a gym membership every month and have that be the end of it. An amount that you can easily pay off every month. If your credit is so bad that they won’t give you any line of credit at all ask your bank about a secured credit card. A secured credit card is essentially depositing money into an account and using your own money as a line of credit. Make all payments on time or ahead of time. If I must sum this up in a few words, use that plastic lightly.
2. Ask about a secured loan. Secured loans are similar to a secured credit card. You borrow your own money and reestablish your credit by showing you can make payments every month and not miss or pay late. This is another means to repairing your credit that is fairly simple. Ask your favorite banker about the possibilities of a secured loan and whether or not it could aid your credit situation. Having both the card and the loan shows that you can be responsible with all major kinds of credit.
3. Pay down existing credit cards. If you have $5000 on that JetBlue Amex and your limit is $9000, consider paying it down. You hear mixed opinions on percentages of credit limits and keeping running balances but my belief is pay it off every month or keep a very small running balance. The industry will preach keeping your balance at no more than 30% of the limit. For instance if your limit is $10,000, do not run a balance of more than $3,000. My thoughts are your balance should really be kept at 10%. So if your limit is $10,000, keep a balance of $1,000. But if you can pay off the balances, I think you should. All the people I know with the best credit scores always pay off their credit cards but continue to use them. Pay down existing balances even if it is slowly to establish good faith.
4. Wipe the dust off that old card. If you haven’t used a card since the midieval times, get a wet cloth and wipe the caked on dust off of it. Use it and again refer back to the previous points. Use it lightly, pay it off, keep low balances. This works well because older cards will have more established credit history. The creditors like artifact credit cards from the times of the dinosaurs. So resurrect that old card use it lightly.
5. Kick, Scream, Claw, Fight. Dispute! Draft letters to Transunion, Equifax, and Experian and tell them that you disagree with that $15 chargeback from Verizon on your credit report (yes this does happen). Use professional language and enlist the help of a solid writer to help you draft those letters if your not so good at letters. Call Verizon and ask them to remove late payment stains from your credit report. If they won’t comply, take it upon yourself and dispute whatever stains on your report that you can. Surprisingly, many are successful by just simply drafting letters.
So there it is. 5 ways to fix your credit. A few of many ways you can attempt to fix your credit score. Credit scores are important when trying to buy cars or houses or boats or planes. You really can’t make many big purchases without solid credit. So think long and hard about running up that Bloomingdales card on a $5,000 shopping spree. Because you may just be feeling the pain of bad credit because of it. Good day folks.
