The most difficult part about beginning a new exercise routine is getting your butt off the couch to go to the gym. Yes, those endless reruns of "America's Next Top Model" can be quite hypnotizing, but think about how great you'll feel once you see the results of your hard work take shape in the form of rock-hard abs!
Similar to getting your body back into shape, rebuilding or repairing your credit isn't something that happens overnight. It will take a lot of hard work and perseverance, but in the end the results are always well worth the time spent.
If you're having trouble finding the motivation to get started, here are some simple things you can do right now to begin improving your credit. And the best part is most of these don't even require removing your butt from the couch!
- Commit to living within your means
In other words, make a promise to yourself that you will spend less than you make. This may seem obvious, but the reality is most people struggle with this principle throughout life. If you can master the art of living within your means, you will be well on your way to excellent credit.
- Take the Latin phrase "Maxima Enim, Patientia Virtus" to heart
Latin for "Patience is the greatest virtue", this phrase has been shortened over the years and is better known today as simply "Patience is a virtue". Your patience will most certainly be tested as you seek to improve your credit using the methods recommended in this article. However, remember that consistency is really what it takes to win the credit game. Continue paying off your debts, and over time you will see improvement in your credit.
- Obtain a free copy of your credit report
How can you fix something if you don't know what to fix? The bottom line is you should know your credit history better than anyone else, so obtain a free copy of your credit report from each of the three major credit bureaus.
- Dispute errors and clean up your credit reports
Credit bureaus make data entry mistakes all the time, so it's important that you check your credit reports often. If you find incorrect information, begin by following their directions for disputing inaccuracies and clean up the errors on your report before you tackle any other issues.
In addition, there are numerous credit monitoring and identity theft protection services that can help you keep tabs on all the activity associated with your credit report.
- Catch up on overdue accounts
Payment history affects your credit scores more than anything else because lenders are most concerned about whether or not you pay your bills on time. In fact, it accounts for about 35% of your credit score.
Extra cash might be hard to come by these days, so do some cleaning around the house and look for anything you could sell on eBay or Craigslist. Use the money to pay down your highest-rate debt first and free your home of clutter at the same time!
- Don't close those unused accounts!
Did you find old credit card accounts on your credit report that you completely forgot about? If so, you may be tempted to immediately pick up the phone and close out accounts that are no longer used or delinquent.
Don’t do it before further investigating the negative effects on your credit score. If it happens to be your oldest credit card, you want to leave it open forever in order to retain the length of your credit history. In addition, if you close out a card that still has an overdue balance, your total available credit will be lowered to zero and it will look to lenders like you have a maxed out card.
- Determine your credit utilization
Credit utilization measures how much you're spending of your available credit limit from all cards combined. For example, your credit utilization is 10% if your combined monthly credit limit is $10,000 and you spend $1,000 per month.
Run a quick analysis of how much you're spending of your available monthly credit limit from all your credit cards. This number should ideally be somewhere between 10-30% of your combined credit limit. If your credit utilization is higher than 30%, try calling your credit card company and requesting an increase to your credit limit which will immediately reduce your debt ratio.
- Set up automatic bill pay with your bank
The best way to prove you are a reliable credit risk is to always make payments on time. If you find yourself forgetting when your credit card payments are due, take a few moments to set up direct debits for all of your cards from one central checking account.
Now you will only have to remember one thing—make sure you have enough in your checking account to cover the payments each month! Your personal bank should be willing to provide minimum balance alerts or overdraft protection in case of an emergency.
- Negotiate with your creditors
Creditors are in business to earn a profit, and it directly affects their bottom line when you don't pay your bills. You may be surprised that your creditors are quite willing to negotiate a reasonable resolution to your financial situation if you contact them in good faith as soon as the problem arises. Your goal is to keep them from turning over your debt to a collection agency, which will only lead to more problems and a lower credit score.
- Seek help from a professional
You have the power to get off the couch and go to the gym, but you may be the type of person that needs to hire a professional trainer. Likewise, you have the power to repair and build your own credit. However, if you feel overwhelmed by your financial situation, there are credit repair services that can help. You can also contact the National Foundation for Credit Counseling (http://www.nfcc.org/) for further guidance and support.
